On 12 November 2018, the Argentine tax authorities published, in the Official Gazette, General Resolution 4332 (the Resolution), which contains additional regulations on the country-by-country (CbC) reporting obligations.

Local filing obligation

The Resolution aligns with the Organisation for Economic Co-operation and Development’s terms of reference and requires multinational enterprise (MNE) groups to complete a local filing if, by the due date for filing the CbC report, the jurisdiction of the ultimate parent entity (UPE) has a tax treaty or tax information exchange agreement (TIEA) in force with Argentina, but does not have a qualifying competent authority agreement in effect.

Argentina has numerous tax information exchange agreements and an extensive tax treaty network. MNE groups should note, however, that the TIEA with the Unites States applies only to tax years that start on or after 1 January 2018.

Accordingly, for tax years ended on 31 December 2017,¹ MNE groups with a UPE that is tax resident in the United States would not be subject to the local filing requirement.

In contrast, if a UPE’s tax year begins on or after 1 January 2018, the Argentine local filing obligation will apply if no qualifying competent authority agreement is in effect between the United States and Argentina. The local filing requirement also will apply if the US MNE does not file its CbC report in another jurisdiction, as subrogated, that complies with the requirements established by the local rules.

The Resolution, however, does not amend the notifications required by Argentine rules (known as 1st and 2nd notification).

€750 million threshold

The Resolution modifies the method for determining whether an MNE surpassed the €750 million threshold for CbC reporting. Under the modified method, MNEs must take the exchange rate of January 2015 into consideration, instead of the exchange rate of 31 January 2015, as stated in the original rule.

The Resolution also states that an MNE must consider this exchange rate change in determining revenues that must be reported under the 1st notification.

Penalties applicable to the other local members of an MNE group

Under the original rule, when more than one legal entity of an MNE group was located in Argentina, one of the entities could file the CbC report on behalf of the others. Specifically, for the 1st and 2nd notification filings, the original rule expressly stated that failing to comply with the filing of the CbC report by one entity resulted in the imposition of penalties on all entities of the MNE group. The penalties, however, did not apply to the local file.

Through the Resolution, the penalties apply to the local file.

Filing procedure

The Resolution confirms that MNE groups must follow the user manual, “Informative Regime. Country by Country Report,” recently published by the Argentine tax authorities, to comply with the CbC report filing obligations.

New deadlines

The Resolution allows 1st and 2nd notifications that were or are due during calendar year 2018 to be filed or amended with no penalties up to 31 December 2018.

The Resolution does not modify the CbC report filing deadlines. Therefore, the 28 December 2018, CbC report filing deadline (applicable to a UPE’s annual tax years ended on 31 December 2017) remains in effect.

Argentine CbC report related filings

MNE groups must file the following CbC report related filings:

• 1st notification. Applies to all entities that are part of an MNE Group, regardless of whether the MNE group exceeds the €750 million threshold.
• 2nd notification. Applies to entities that: (1) are part of an MNE Group that exceeds the €750 million threshold; and (2) are not subject to the local filing of the CbC report.
• CbC report. Applies to MNEs that exceed the €750 million threshold; the responsible entities are:
  • UPEs of an MNE group that are Argentine tax resident
  • Argentine subrogated entities
  • An Argentine tax resident member of an MNE group that is not a UPE or subrogated entity, provided at least one of the following conditions is met:
    • The UPE is not required in its tax resident jurisdiction to file the CbC report.
    • At the time of filing the CbC report, the jurisdiction of the UPE has a tax treaty or tax information exchange agreement in force with Argentina, but does not have a qualifying competent authority agreement in force.
    • There is a systemic failure of the UPE tax jurisdiction (as per the list published by the Argentine tax authorities).

The Resolution did not amend the treatment of the subrogated filings, either local or abroad.

Please refer to your EY contact for further information regarding the Argentine CbC report filing obligations. The rules are complex and minor details may result in a different treatment.

Endnote

1. First annual tax year end with CbC reporting obligations under the Argentine regulations.

For additional information with respect to this Alert, please contact the following:

Pistrelli, Henry Martin & Asociados S.R.L., Buenos Aires

• Carlos Casanovas | carlos.casanovas@ar.ey.com
• Gustavo Scravaglieri | gustavo.scravaglieri@ar.ey.com
• Ariel Becher | ariel.becher@ar.ey.com
• Milton Gonzalez Malla | milton.gonzalez-malla@ar.ey.com
• Esteban Kacanas | esteban.kacanas@ar.ey.com
• Manuel Val Lema | manuel.vallema@ar.ey.com
• Mariano Rodriguez Moran | mariano.rodriguez-moran@ar.ey.com

Ernst & Young, LLP, Latin America Business Center, New York

• Pablo Wejcman | pablo.wejcman@ey.com
• Juan Ignacio Pernin | juan.ignacio.pernin@ey.com
• Ana Mingramm | ana.mingramm@ey.com
• Enrique Perez Grovas | enrique.perezgrovas@ey.com

Ernst & Young LLP (United Kingdom), Latin American Business Center, London

• Jose Padilla | jpadilla@uk.ey.com
• Pablo Baroffio | pablo.baroffio@uk.ey.com

Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific

• Raul Moreno, Tokyo | raul.moreno@jp.ey.com
• Luis Coronado, Singapore | luis.coronado@sg.ey.com 

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