U.S. Tax Desk Newsletter - October 2021

Modifications in the Argentinean TP obligations. New requirements 

Considering the regulations established by General Rule 4717/20 (GR 4717/20), the taxpayers will have to comply with new document requirements related to financial transactions and intragroup services. In this regard, the new rules follow the TP Guidelines issued by OECD. The above mentioned GR 4717/20 sets the following:  

Financial transactions

The new GR follows the TP guidance on financial transactions issued by the OCDE in February 2020.

Consequently, a detailed functional analysis is required. The taxpayer must demonstrate whether the lender has sufficient economic and financial capacity to provide the funds and assume the related risks.  Furthermore, among other aspects, the taxpayers have to demonstrate that the borrower has financial capacity for repaying the principal and interest at the time of commitment. Additionally, the Transfer Pricing Report must include a specific Appendix with additional information requested for each intercompany financial transaction carried out in the fiscal year. Finally, among other aspects, GR 4717 also states that if the taxpayer does not provide the requested information in the Appendix, the interest rate consistent with the credit rating of the MNE will be used as a reference for determining the arm’s-length price of such financial transaction.

On the other hand, affidavit F. 2668 requests specific or additional information such as agreement start date, contract end date, amount of interest (ARS and USD), capital entry date, among others.  

Intragroup services

It is worth mentioning that local companies have to apply a double test related to services paid to related parties.

In this case, the new GR includes an additional test to the one performed to fulfil the Income Tax Return for services received. In this regard, the TP report has to validate that the intragroup services have been provided (benefit tests), the price has been set in accordance with the arm´s length principle and the service is expected to offer a benefit or economic value to the taxpayer.

As it is described in the TP Guidelines, some services are not considered as established between independent parties; as an example, we can mention:

• Expenses charges not related to the core business of the taxpayer
• Shareholder activity expenses
• Duplicated services (Administrative, HR, IT, Legal, Tax)

If the taxpayer cannot prove that the services were carried out or the services do not pass the test, a TP adjustment must be made.

Finally, the taxpayers have to submit the Master File when the total revenue of the MNE Group exceeds the amount of USD 39 million. 

For further information, please contact:

Daniela Kumor: daniela.kumor@mazars.com.ar

Mariano Scorza mariano.scorza@mazars.com.ar