May 28, 2020
Argentina issues long-awaited transfer pricing regulations
On 15 May 2020, the Argentine Federal Tax Authorities (AFIP – Administración Federal de Ingresos Públicos) published, in the Official Gazette, General Resolution No. 4717 (GR 4717), containing the long-awaited regulations implementing the transfer pricing (TP) provisions enacted as part of the tax reform in December 2017. These rules mainly cover the TP compliance obligations for fiscal years ended December 2018 and onwards (including due dates and the creation of new returns). Those compliance obligations include the filing of the TP report (local file) and master file. Additionally, the regulations introduce definitions and requirements that will impact existing and future intercompany transactions involving Argentine companies. Multinational companies doing business in Argentina should review the new regulations and assess their intercompany transactions.
Compliance obligations and due dates
The TP report and master file were due beginning the week of 18 May 2020. GR 4717 extends the filing due dates for Form 2668, TP report, and the master file as follows:
After 2020, the filings will be due as follows:
Taxpayers will have to report:
The regulations include several rules to determine which transactions need to be reported and the information required for each of them. To determine whether a transaction has to be reported, taxpayers should consider certain factors, such as the amount of the transactions (stand-alone and aggregated) and whether they belong to an economic group subject to the filing of a master file or the country-by-country (CbC) report. Because of the low thresholds established in GR 4717 and the interaction of various regulations, it is highly likely that most Argentine entities conducting transactions with foreign related parties will be required to perform at least one of the following TP filings:
Filings related to the CbC report continue to be regulated through AFIP’s General Resolution 4130/2017.
Definitions and concepts applicable to the analysis of cross-border transactions
In addition to the general framework for TP compliance, GR 4717 introduces fundamental definitions and requirements that will impact the planning and implementation of intercompany transactions involving Argentine companies. Specifically, GR 4717 requires taxpayers to perform a segmented analysis for each business line and an analysis based on accounting information adjusted for inflation (according to Argentine GAAP). It also requires taxpayers to follow the local tested-party rule.
Additionally, GR 4717 provides specific criteria for the analysis of:
GR 4717 allows taxpayers to use “other TP methods” in certain instances, such as:
For transactions involving international traders, GR 4717 establishes:
It also defines business restructurings and the minimum information that should be included in the TP report, as well as the local requirements for filing the master file.
Companies should carefully assess the obligations with which they must comply and consider implementing alternative processes for intercompany transactions in light of the new definitions and specific criteria established for different issues. Failure to comply with this new legislation may result in penalties and increase the probability of being audited by the tax authorities.
This Tax Alert only presents an initial overview of the main developments contained in GR 4717, but the resolution could have significant implications for companies doing business in Argentina. Companies may have to perform a detailed analysis of financial operations, service provisions and transactions involving intangibles or intermediaries, among others.
For additional information with respect to this Alert, please contact the following:
Pistrelli, Henry Martin & Asociados S.R.L., Buenos Aires
Ernst & Young LLP (United States), Latin American Business Center, New York
Ernst & Young Abogados, Latin American Business Center, Madrid
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific