Stamp Tax: No Taxation without Legal Instrumentation

On March 25, 2015, in court file “Grainco Pampa S.A.”, the Argentine Supreme Court of Justice revoked the decision issued by the Superior Court of Justice of the Province of La Pampa and concluded that the legal documents under discussion should not trigger Stamp Tax.

The Argentine Supreme Court took into account that the Local Tax Authority considered that the analyzed legal documents were all part of a heterogeneous group consisting of: (i) list of operations issued by Grainco Pampa S.A.; (ii) legal forms required for the buying and selling of grains signed by Grainco Pampa’s legal representative but not by the broker or the buyer; (iii) offer letters with the broker’s letterhead but not signed by the buyer. According to such documentation, the Local Tax Authority considered that Stamp Tax should apply to grain collection operations since they were actually executed and added that, notwithstanding the fact that it was not disputed that the company did not execute the legal instruments, the formal character of the tax should not be considered an obstacle to take into consideration the real intention of the involved parties. That criterion was confirmed by the Administrative Court of Appeals and later by the Superior Court of Justice of the Province of La Pampa.

However, the Argentine Supreme Court of Justice in its ruling restated its doctrine in relation to Stamp Tax, reconfirming the need to comply with the principle of instrumentation to make Stamp Tax applicable. Thus, the Argentine Supreme Court said:

1. The documents analyzed lacked the self-sufficiency required to enforce the obligations embodied in them, as each one demonstrated that it is impossible to consider the offer accepted and therefore, the respective contract set out. Consequently, the Local Tax Authority’s assessment contradicts the provincial Tax Code, as well as the Federal Tax Law (Ley de Coparticipación Federal de Impuestos), which requires that “the taxed document has the characteristics of a legal title qualified to enforce obligations without the need for any other document”.
2. When it comes to Stamp Tax, the principle of economic reality is not as important as it may be in relation to other taxes, provided that the implementation of the act is what is being taxed.
3. The judgment under revision is dismissible in terms of the doctrine of arbitrary judgments, since it is contrary to the criterion of instrumentation and the Argentine Supreme Court’s repeated case law on the matter, which also means a violation of the principle that states that only the Legislative Branch can levy taxes, and the right to private property.

Interestingly, after several years without ruling on the subject –the last pronouncements in this regard dated back to 2009- the Court has decided to restate, categorically and by the unanimous vote of the Judges, its doctrine with respect to Stamp Tax and the need to comply with the principle of instrumentation. This is yet more noteworthy taking into account that the Province of La Pampa, which sought to depart from that case law, was involved in the first precedent in which the Court exposed its current approach ("Banco Rio de la Plata c/ Provincia de La Pampa" of July 4, 2003).