Multilateral Agreement: Interest on Fixed-Term Deposits

On August 13, 2025, the Arbitration Commission of the Multilateral Agreement issued Resolution 17/2025 in the specific case “British American Tobacco Argentina SAICyF (BATA) c/ provincia de Buenos Aires.” There, the Commission decided how the income derived from obtaining interest on fixed-term deposits should be attributed under the general regime of the Multilateral Agreement.

Let us remember that this is an agreement signed by the Argentine provinces and the City of Buenos Aires to divide the taxable base of the gross income tax among them, so that the total income of a taxpayer with activities in more than one jurisdiction is not subject to multiple taxation. In this case, the taxpayer argued that, since the income comes from an investment made in the jurisdiction where the bank account is located (and not from the main activity), the income must be assigned to that jurisdiction.

On the contrary, the provincial tax authority held that the income should be attributed using as a reasonable parameter the percentage of income assigned by the company to its main activity of wholesale sales, considering that these profits came from the development of the taxpayer's activity, as a whole, carried out in all jurisdictions, which makes it impossible to precisely determine the contribution of each jurisdiction.

The Arbitration Commission of the Multilateral Agreement sustained the taxpayer's claim, holding that the income originates in the jurisdiction where the financial investment is made, and that the income is generated there, as a result of the transaction.

To issue this ruling, the Commission considered that the activity generating the disputed income consists of lending a specific sum of money to a financial institution, in exchange for interest, for a set period. Consequently, the generation of such income is determined by the financial placement and, in this specific case, by the location where the taxpayer makes the funds available to the financial institution.

Thus, the provincial tax authority's request to apply the coefficient determined by the taxpayer's main activity was rejected.