Malteria Pampa S.A in Argentina exported malt to a related intermediary in Uruguay that in turn sold on the goods to the brewery in Brazil at a higher price.
The tax authorities applied the Sixth method and issued an assessment where the export price was determined based on the latter price used in the transaction with the brewery in Brazil. Furthermore a substantial fine was issued to the Malteria Pampa S.A. for non compliance.
“That the factual and legal points considered by the customs verification – corroborated in this pronouncement – complied with the application parameters of the TP rules invoked in the Technical Report, forming a solid conviction that the transactional prices of the sale declared in the field “Merchandise Value” of the PE 07-003-EC01-004994-P and PE N° 07-003- EC01-004995-Z of Maltería Pampa S. A. are manifestly inaccurate, constituting an under-invoicing that causes the plaintiff to engage in the conduct punishable by Article 954(1)(c) of the Civil Code, for the entry into the country -actual or potential- of an amount as an export price different from that which would have corresponded; consequently, the fine imposed by the DGA must be confirmed.”
This decision was then appealed to the Federal Administrative Court.
Judgement of the Federal Administrative Court
The Court dismissed the appeal of Malteria Pampa SA ruled in favor of the tax authorities.
“this Court hereby recognises that the interpretation that conceives of Law 22.415 and Law 20.628 as bodies of law that make up Federal Law and not as watertight compartments that run along parallel paths with no possibility of intersection is correct. The fact of export under-invoicing deserves to be analysed under the convergent application of those laws that deal with this case. From this perspective, the Chamber concludes that the application of the transfer pricing institute should be validated, in this case, so that customs can control the entry of the amount that effectively corresponds, since the operation involves the export of commodities between companies that are functionally linked.”
“the veracity and accuracy of the customs declaration, as legal assets protected by section 954 of the Customs Code, involve the interest of the Federal Government in preventing price manipulation manoeuvres in international trade between companies that make up the same economic group in order to reduce prices in our country and transfer the difference to jurisdictions with lower levels of taxation and foreign exchange control, with the harmful consequences that this implies for the collection of the national treasury and the macroeconomy of the Argentine Republic.”
“In view of the foregoing, the Court RESOLVES: to dismiss the appeal lodged by the plaintiff and, consequently, to uphold the judgment under appeal. With costs, as there is no merit for a waiver (art. 68, first paragraph of the CPCCN)”
Argentina vs Malteria October 2021 RE