On September 20, 2017, the Argentine tax authorities (Administración Federal de Ingresos Públicos or AFIP) issued General Resolution No. 4130-E to introduce country-by-country (CbC) reporting requirements that align with the BEPS Action 13 minimum standard. The measures were published in Argentina’s official gazette the same day, and entered into force accordingly.
The AFIP also issued annexes the same day that define various terms in General Resolution No. 4130-E, and set out the template for CbC report filings.
Title I of General Resolution No. 4130-E requires annual filing of a CbC report when a multinational enterprise (MNE) group’s annual consolidated group revenue is at least €750 million (or its equivalent in Argentine currency as of January 31, 2015), to (1) report information on certain indicators of economic activity in each jurisdiction in which the MNE group does business; (2) identify each entity within the group doing business in a particular jurisdiction; and (3) provide an indication of the business activity in which each entity engaged.
When the ultimate parent entity of the MNE group resides in Argentina, the group will have to file the CbC report with the AFIP within one year of the end of the fiscal year concerned. If the ultimate parent is not resident in Argentina, and is not required to file in its jurisdiction of residence (or the foreign jurisdiction does not exchange CbC reports with Argentina), a constituent entity in Argentina will have to file by the same deadline if any of the following apply:
- The group’s parent company is not required to provide a CbC report in its jurisdiction of residence.
- This other jurisdiction does not have an existing agreement with Argentina on the automatic exchange of CbC reports.
- There has been a systemic failure for exchange by the ultimate parent’s jurisdiction.
Argentine taxpayers will have to file their CbC report electronically through AFIP’s website, which will issue a receipt (Affidavit Form F.8097) as proof of the filing.
CbC Reporting Format
When applicable, an MNE group has to include the following information in its Argentine CbC report:
- Aggregate information relating to the amount of revenue, profit (loss) before income tax, income tax paid, income tax accrued, stated capital, accumulated earnings, number of employees, and tangible assets other than cash or cash equivalents with regard to each jurisdiction in which an “MNE group” operates.
- Identification of each “constituent entity” of the “MNE group” setting out the jurisdiction of tax residence of such constituent entity and, when different from such jurisdiction of tax residence, the jurisdiction under the laws of which such constituent entity is organized, and the nature of the main business activity or activities of such constituent entity.
Annex I to General Resolution No. 4130-E defines various terms in the CbC reporting requirements, including the following:
- Constituent entity is (1) any separate business unit of an MNE group that is included in the consolidated financial statements of the MNE group for financial reporting purposes, or would be so included if equity interests in such business unit of an MNE group were traded on a public securities exchange; (2) any such business unit that is excluded from the MNE group’s consolidated financial statements solely on size or materiality grounds; and (3) any permanent establishment of any separate business unit of the MNE group included in (1) or (2) above, if the business unit prepares a separate financial statement for such permanent establishment for financial reporting, regulatory, tax reporting, or internal management control purposes.
- MNE group is any “group” that (1) includes two or more enterprises the tax residence for which is in different jurisdictions, or includes an enterprise that is resident for tax purposes in one jurisdiction and is subject to tax with respect to the business carried out through a permanent establishment in another jurisdiction; and (2) is not an “excluded MNE group” (i.e., having revenue less than a certain threshold). “Group” refers to a collection of enterprises related through ownership or control such that it is either required to prepare consolidated financial statements for financial reporting purposes under applicable accounting principles or would be so required if equity interests in any of the enterprises were traded on a public securities exchange.
Annex II to General Resolution No. 4130-E contains template forms for CbC reporting, including Table 1 (Overview of income distribution, taxation, and business activities according to tax jurisdictions), Table 2 (List of all member entities resident in a tax jurisdiction, jurisdiction of incorporation, and main business activities) and Table 3 (Additional information).
Use and Confidentiality
Title I of General Resolution No. 4130-E addresses the use and confidentiality of the information in the CbC report. Among other provisions, transfer pricing adjustments by the AFIP will not be based on the CbC report and the confidentiality of the information must be preserved to the same extent as if the information were provided under the OECD Convention on Mutual Administrative Assistance in Tax Matters ( “OECD Convention”).
For background, on September 13, 2012, Argentina ratified the 2010 protocol to the OECD Convention, which entered into force on January 1, 2013, in Argentina. The OECD Convention includes provisions regarding the exchange of information on request, spontaneous information exchange, tax examinations in other countries, simultaneous tax examinations, and assistance in tax collection.
Automatic Exchange of CbC Reports
On June 30, 2016, Argentina signed the OECD Multilateral Competent Authority Agreement for the automatic exchange of CbC reports (“CbC MCAA”). Under the CbC MCAA, signatories may exchange CbC reports with other signatories if they have CbC reporting requirements in place and are a party to the OECD Convention.
Among other things, the CbC MCAA provides that CbC report information will be used to assess high-level transfer pricing and other BEPS-related risks, but not as a substitute for a detailed transfer pricing analysis of individual transactions and prices based on a full functional and comparability analysis. The information may be used as a basis for further inquiring into the multinational’s transfer pricing arrangements in the course of a tax audit. If an adjustment resulting from further inquiries based on the CbC report leads to undesirable economic outcomes, the tax authorities of the jurisdictions of residence of the affected entities must consult each other in attempting to resolve the case.
CbC Reporting Notifications
Any entity with a tax presence in Argentina through a legal entity or a permanent establishment, and that is a member of a MNE group in which at least one entity is required to submit a CbC report, will have to provide electronically the identity and tax residence of the reporting entity to AFIP by the last business day of the third month following the end of their fiscal year.
Title III of General Resolution No. 4130-E says that in case of late filing, incomplete or inaccurate reporting, or other non-compliance, the reporting entity or resident constituent entity may be fined, under Law No. 11,683, up to ARS 45,000 (with possible increase of up to ten times the foregoing amount when the entity has gross income of ARS 10 million or more).