Harmful Tax Practices – 2017 Peer Review Reports on the Exchange of Information on Tax Rulings

Argentina

Argentina has met all aspects of the terms of reference (ToR) for the calendar year 2017 (year in review) except that Argentina had difficulties in identifying future rulings (ToR I.4.1.2). Argentina is recommended to provide any necessary interpretive guidance and continue its efforts to ensure that there is an effective system for identifying all future rulings in a timely way.

Argentina can legally issue five types of rulings within the scope of the transparency framework.

In practice, Argentina has issued two past rulings; for the period 1 April 2016 - 31 December 2016, Argentina issued no future rulings; and for the year in review, Argentina issued one future ruling within the scope of the transparency framework.

No peer input was received in respect of the exchanges of information on rulings received from Argentina.

Introduction

37.  This peer review covers Argentina’s implementation of the BEPS Action 5 transparency framework for the year 2017. The report has four parts, each relating to a key part of the ToR. Each part is discussed in turn. A summary of recommendations is included at the end of this report.

A. The information gathering process

38.  This section relates to the adequacy of the process used to collect information relating to the tax rulings that are in the scope of the transparency framework, both past and future rulings, as well as the jurisdictions with which information on rulings should be exchanged.

39.  Argentina can legally issue the five following types of rulings within the scope of the transparency framework: (i) rulings related to preferential regimes;1 (ii) cross-border unilateral advance pricing agreements (APAs) and any other cross-border unilateral tax rulings (such as an advance tax ruling) covering transfer pricing or the application of transfer pricing principles; (iii) cross-border rulings giving a unilateral downward adjustment to the taxpayer’s taxable profits in the country giving the ruling; (iv) permanent establishment rulings; and (v) related party conduit rulings. These rulings are referred to as individual binding consultations. Argentina notes that it does not issue APAs and that although the binding consultation regime does not explicitly exclude any of these categories of issues from its scope, the legal tax framework would not allow for a downward adjustment ruling. Argentina also notes that the preferential regime is not granted by tax ruling and there would not be expected to be any reason for a binding consultation on the interpretation of the regime to be given in practice. In addition, Argentina notes that it is highly unlikely that a conduit ruling would be issued given the structure of Argentina’s tax laws which make it unlikely to be a jurisdiction of choice for a taxpayer using such arrangements. In Argentina, a specific unit (the Deputy General Direction for Technical and Legal Tax Matters) within the tax administration, the Federal Administration of Public Revenues (AFIP), is in charge of issuing the tax rulings. Rulings are published in anonymized form.2

Past rulings (ToR I.4.1.1, I.4.1.2, I.4.2.1, I.4.2.2)

40.  For Argentina, past rulings are any tax rulings within scope that are issued either: (i) on or after 1 January 2014 but before 1 April 2016; or (ii) on or after 1 January 2010 but before 1 January 2014, provided they were still in effect as at 1 January 2014.

41.  In the prior year peer review report, it was determined that AFIP’s undertakings to identify past rulings and all potential exchange jurisdictions were sufficient to meet the minimum standard.

42.  AFIP’s implementation in this regard remains unchanged, and therefore continues to meet the minimum standard.

Future rulings (ToR I.4.1.1, I.4.1.2, I.4.2.1)

43.  For Argentina, future rulings are any tax rulings within scope that are issued on or after 1 April 2016.

44.  In the prior year peer review report, it was determined that AFIP’s process for identifying the rulings and potential exchange jurisdictions was sufficient to meet the minimum standard. This process was that the Deputy General Direction for Technical and Legal Tax Matters (which is responsible for issuing rulings) would alert the Directorate for International Affairs in case a relevant tax ruling is issued. The Directorate for International Affairs would analyse the ruling to verify whether the ruling is within the scope of the transparency framework, and also consult the public repository of rulings on a quarterly basis to double check that all relevant rulings have been identified. Information on potential exchange jurisdictions would be identified from information from the ruling itself or where this was not sufficient, by AFIP exercising its discretionary powers to request additional information from the taxpayer.

45.  During the information gathering process for future rulings for the year in review, there was a delay in the identification process of one future ruling. The application for the future ruling issued occurred prior to the publication of Action 5 Report and the ruling was issued in February 2017 and published in October 2017. While checking the public repository of anonymised consultations by the end of November 2017, it was noted that this consultation had been issued and that it potentially fell within the scope of the transparency framework. In late 2017, measures were taken to obtain the details of the full technical report in order to determine if this ruling was subject to exchange and whether there were legal instruments which allow spontaneous exchange of information for the period referred in the ruling in force with the relevant jurisdictions. As a result of the analysis of the ruling, Argentina confirmed that the future ruling was within the scope of the transparency framework, and the relevant exchange was made. Argentina notes it is a temporary circumstance related to the issuance of the particular future ruling.

46.  AFIP is working on modifications to its internal regulations to expressly contemplate the process currently in place and to require the taxpayer to provide the relevant information when submitting an application for a ruling which could potentially fall within the scope of the transparency framework, as well as to have a clearer process on the steps taken to identify those tax rulings. Argentina expects to have these modifications in force by the end of 2018.

Review and supervision mechanism (ToR I.4.3)

47.  In the prior year peer review report, it was determined that AFIP’s review and supervision mechanisms were sufficient to meet the minimum standard. AFIP’s implementation in this regard remains unchanged, and therefore continues to meet the minimum standard.

Conclusion on section A

48.  Argentina has met all of the ToR for the information gathering process except that Argentina had difficulties in identifying one future ruling (ToR I.4.1.2). Argentina is finalising modifications to the internal regulations to make sure the identification of future rulings occurs in all cases, the effectiveness of which will be reviewed in the 2019 peer review. Argentina is recommended to provide any necessary interpretive guidance and continue its efforts to ensure that there is an effective system for identifying all future rulings in a timely way.

B. The exchange of information

Legal basis for spontaneous exchange of information (ToR II.5.1, II.5.2)

49.  Argentina has the necessary domestic legal basis to exchange information spontaneously. Argentina notes that there are no legal or practical impediments that prevent the spontaneous exchange of information on rulings as contemplated in the Action 5 minimum standard.

50.  Argentina is a party to international agreements permitting spontaneous exchange of information, including the (i) Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol (OECD/Council of Europe, 2011) (“the Convention”) and (ii) double tax agreements in force with 16 jurisdictions and (iii) tax information exchange agreements with seven jurisdictions.3

Completion and exchange of templates (ToR II.5.3, II.5.4, II.5.5, II.5.6, II.5.7)

51.  In the prior year peer review report, it was determined that AFIP’s completion and exchange of templates were sufficient to meet the minimum standard. AFIP’s implementation in this regard remains unchanged, and therefore continues to meet the minimum standard. As there were no relevant rulings to be exchanged in the prior year, this was the first year in which the process was used in practice. The processes in relation to the completion of the summary section for the AFIP are as follows: The information required by the template of Annex C is filled in manually by the Directorate of International Affairs after analysing the full technical report of the binding consultation. The information of that report is summarised in order to produce a short summary of the issue covered by the ruling in English or in Spanish, if it is the language bilaterally agreed. Furthermore, Argentina has confirmed that their approach to the completion of the summary section in section 7 of Annex C of the 2015 Action 5 Report (OECD, 2015) conforms to the prescribed instructions for the section. Where relevant, Argentina also utilises the internal FHTP suggested guidance.

52.  With respect to the one ruling within the scope of the transparency framework which was issued in the 2017 year of review, this was identified as being within scope only in early 2018, for the reasons noted in section A above. The ruling was exchanged in February 2018, as soon confirmed that it was subject to exchange and that there was a legal instrument in force which allows spontaneous exchange of information for the covered period.

53.  The timeliness of exchanges is as follows:

 

Past rulings in the scope of the transparency framework	Number of exchanges transmitted by 31 December 2017	Delayed exchanges
		Number of exchanges not transmitted by 31 December 2017	Reasons for the delays	Any other comments
	N/A	N/A	N/A
Future rulings in the scope of the transparency framework	Number of exchanges transmitted within three months of the information becoming available to the competent authority or immediately after legal impediments have been lifted	Delayed exchanges
		Number of exchanges transmitted later than three months of the information on rulings becoming available to the competent authority	Reasons for the delays	Any other comments
	0	2	Date of submission of the binding consultation	See paragraph 16 above.
Total	0	2

 

Follow up requests received for exchange of the ruling	Number	Average time to provide response	Number of requests not answered
	0	N/A	N/A

Conclusion on section B

54.  Argentina has the necessary legal basis for spontaneous exchange of information, and a process for completing the templates in a timely way. A delay in the timeliness of exchanges occurred due to a problem in the identification process and once identified, the information on this future ruling was exchanged within one month of the deadline. As this was not an issue related to the exchange of information process itself, no recommendation in this section is made. Argentina has met all of the ToR for the exchange of information process.

C. Statistics (ToR IV)

55.  As no information on rulings was exchanged for the year in review, no statistical data can be reported.

D. Matters related to intellectual property regimes (ToR I.4.1.3)

56.  Argentina does not offer an intellectual property regime for which transparency requirements under the Action 5 Report (OECD, 2015) were imposed.

Summary of recommendations on implementation of the transparency framework

 

Aspect of implementation of the transparency framework that should be improved	Recommendation for improvement
Argentina experienced difficulties on the identification of information on future rulings.	Argentina is recommended to provide any necessary interpretive guidance and continue its efforts to ensure that there is an effective system for identifying all future rulings in a timely way.

References

OECD (2017), BEPS Action 5 on Harmful Tax Practices – Terms of Reference and Methodology for the Conduct of the Peer Reviews of the Action 5 Transparency Framework, OECD/G20 Base Erosion and Profit Shifting Project, OECD, Paris. www.oecd.org/tax/beps/beps-action-5-harmful-tax-practices-peer-review-transparencyframework.pdf.

OECD (2015), Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance, Action 5 - 2015 Final Report, OECD/G20 Base Erosion and Profit Shifting Project, OECD Publishing, Paris. https://doi.org/10.1787/9789264241190-en.

OECD/Council of Europe (2011), The Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264115606-en.

Notes

← 1.  With respect to the following preferential regime: Promotional Regime for Software Industry.

← 2.  Available at http://biblioteca.afip.gob.ar/search/query/BoletinesDGI.aspx (accessed 20 November 2018) and http://biblioteca.afip.gob.ar/estaticos/consultasVinculantes/index.aspx (accessed 20 November 2018).

← 3.  Parties to the Convention are available here: www.oecd.org/tax/exchange-of-tax-information/convention-on-mutual-administrative-assistance-in-tax-matters.htm. Argentina has in force Double Tax Agreements permitting spontaneous exchange of information with: Australia, Belgium, Bolivia, Brazil, Canada, Chile, Denmark, Finland, France, Italy, Netherlands, Norway, Russia, Spain, Sweden and United Kingdom. In addition, Argentina has agreements permitting spontaneous exchange of information with Aruba, Azerbaijan, Brazil, Ecuador, Italy, Peru, and Venezuela.