At a press conference in November, the Argentine Customs Director General announced that customs will continue to focus on customs valuation and transfer pricing issues.
The stifling foreign exchange controls currently in place in Argentina are seen by customs as an incentive for importers to artificially increase the import value of goods (which allows more foreign currency to be remitted out of the country). (a practice known as “overcharging” because the ), but also allows the exporter to artificially reduce the value of the goods being exported (this means that the foreign exchange is not forced to be converted into pesos at an artificially low foreign exchange rate). (This is known as an “underbilling”).
In the case of foreign multinationals, Customs pays attention to related party transactions involving the presence of a related party intermediary between the Argentine importer and the (relevant) foreign manufacturer of goods .
In many of these transactions, Customs has no substance to such intermediaries and, therefore, performs activities, provides services, and values that justify the price differences between each step of the transaction. claims to add or not. According to Customs, the whole structure is just a way to overcharge imports (or vice versa, undercharge exports) in order to remit more foreign currency abroad.
This could be either a crime or an administrative violation, depending on customs’ “capricious” interpretation of the facts.
Argentinian importers/exporters may submit information about intermediaries to defend their position, such as: (ii) services provided and risks borne by intermediaries (e.g. royalties paid to owners of IP, administrative and marketing costs associated with products sold, foreign exchange risk borne by intermediaries);
This defense requires the filing of the intermediary’s financial statements, the agreement the intermediary has with the owner of the IP or the contract manufacturer in the country of origin, and proof of accounting for the costs incurred by the intermediary in respect of the goods sold. Argentina, and similar documents. In general, our experience is that the world’s treasury ministries are unwilling to share this information with local customs authorities, greatly limiting the chances of a successful defense.
One way to reduce the risk of customs prosecution is to sign up for a special procedure set out in General Resolution 4419 of the Federal Tax Service. This general resolution allows for the declaration of definitive interim import prices at the end of each year after corresponding transfer pricing adjustments have been made. However, companies were reluctant to participate due to the amount of information that parties had to provide to Customs to qualify for this special scheme, especially the obligation to provide substantive financial information about their intermediaries.
