Amendments to the Argentine Binding Consultation Regime

1.            The Binding Consultation Regime

The Binding Consultation Regime was incorporated following section 4 of Law No. 11,683 of Tax Procedure through Law No. 26,044 (Official Gazette No. 30,689 - 7/6/2005). The purpose of this mechanism is to provide legal certainty to taxpayers and liable individuals. To this end, the Binding Consultation Regime allows the Argentine Federal Tax Authority (AFIP) to express its criterion for the determination of federal taxes and/or social security resources.

Any consultation should be made prior to the occurrence of the taxable event concerned or within the deadline for submission of the respective affidavit. In turn, the AFIP has 90 days to issue a decision.

The use of this mechanism does not suspend deadlines for the fulfillment of formal and/or material obligations. Nor does it justify  defaults in which the obligated parties may incur.

The answers to the consultations are public and should be disclosed by the AFIP. The consultant has the possibility of appealing the administrative acts before the Minister of Economy and Production (now Minister of Finance) should the results be adverse. The appeal does not suspend the effects of the consulted response.

The answer given by the AFIP and/or the criterion adopted by the Minister of Finance in resolving the appeal will be binding, both for the tax authority and the consultant, as long as the background information of the proposal submitted for consideration as the data provided when formulating the consultation are not changed.
 

2.            The regulation of the Binding Consultation Regime

The Binding Consultation Regime was regulated by the General Resolution (AFIP) No. 1948/2005 (Official Gazette No. 30,752 - 10/4/2005). As far this review is concerned, this regulation contemplates the cases excluded from the Binding Consultation Regime; the payroll of subjects who can use this mechanism; as well as other applicable procedural requirements.

General Resolution No. 4213-E has introduced modifications regarding the following three issues.
 

- Situations excluded from the Binding Consultation Regime

Subparagraph (c) of section 3 of the General Resolution (AFIP) No. 1948/2005 was amended so that not only will it not be possible to carry out consultations regarding taxable events or situations where an appeal has been submitted - administrative or judicial - pending resolution, but also when no consultations regarding taxable events or situations where an administrative or judicial decision of any instance is final, with respect to the same consultant.

The other two situations of exclusion are maintained: taxable events or situations included in treaties or agreements entered into by the Argentine Republic to avoid international double taxation (section 3 (a) of General Resolution (AFIP) No. 1948/2005 ); and taxable events or situations that refer to the application or interpretation of perception or withholding systems  established by the Argentine Federal Tax Authority, unless otherwise provided (section 3 (b) of General Resolution (AFIP) No. 1948 / 2005).
 

- Payroll of subjects who can access the Binding Consultation Regime

Section 4 (b) of the General Resolution (AFIP) No. 1948/2005 was amended expanding the spectrum of subjects eligible for binding consultations. It includes subjects that obtain profits from the fourth category resulting from the personal work under an employment relationship – section 79  (b) of the Income Tax Law-, the subjects listed in subparagraph (c) of said section 79 of the Income Tax Law. This is: (i) individuals who obtain income from retirements, pensions, withdrawals or subsidies of any kind, as long as they have their origin in personal work and to the extent that they have been subject to the payment of the tax and (ii) the counselors of cooperative societies.

The other subjects contemplated in section 4 of the General Resolution (AFIP) No. 1948/2005 are maintained: taxpayers and liable individuals included in sections 5 and 6 of Law No. 11,683 of Tax Procedure (subparagraph a); and subjects submitting investment projects to be carried out in the country (subparagraph c).
 

- Procedural issues

Section 5 of General Resolution (AFIP) No. 1948/2005 was amended. Setting up and maintaining an electronic fiscal address was added as a requirement for admissibility of the consultation. This is important because this means that the subject conducting the consultation has the obligation to periodically monitor the notifications received at the electronic fiscal address constituted with the AFIP. This authority must notify the admissibility of the binding consultation and, where appropriate, the decision on the matter under consideration.

Section 15 of the General Resolution (AFIP) No. 1948/2005 was amended. The Electronic Library available on the AFIP’s website was incorporated as a channel for diffusion of answers to queries. This channel is added to the AFIP’s Information Bulletin to provide greater accessibility to the criteria adopted by said tax authority.