Tax Declaratory Action: Certainty Without Prior Assessment

On June 3, 2025, the Argentine Supreme Court of Justice, in the case “Cepas Argentinas S.A. v. Province of Córdoba – Declaratory Action,” upheld a declaratory action seeking the unconstitutionality of provincial rules that imposed differential gross income tax rates based on the location of the taxpayer’s place of business. The decision is notable for the Court’s flexible approach to the admissibility requirements applicable to declaratory actions.

In her opinion, the Attorney General concluded that the claim did not meet the statutory requirements for declaratory action under the Civil and Commercial Procedural Code. In particular, she asserted that the matter did not constitute a justiciable case, because the taxpayer was currently complying with the higher tax rate that it was challenging, and because there had been no prior assessment or administrative proceedings initiated by the provincial tax authority. The Attorney General thus reasoned that the declaratory action was not procedurally appropriate, since the underlying controversy was hypothetical (namely, a potential future assessment and enforcement action if the taxpayer ceased to comply with the higher rate).

The Supreme Court, however, departed from the Attorney General’s view. In its decision, the Court first asserted that two conditions must be met for declaratory actions to proceed: legal uncertainty and the existence of a “case or controversy.” As for the latter, the Court acknowledged that a “case” is generally triggered by administrative action (such as a tax assessment or collection proceeding). However, it emphasized that, under certain circumstances, the challenged regulations—by their mere existence and without the need for administrative enforcement—may cause the taxpayer’s rights a concrete affection. In such cases, the Court held, the legal effect of the rule creates a binding relationship between the parties, whereby one party holds a serious and sufficient legal interest in seeking relief. In that context, a declaratory action is the appropriate means to resolve the legal uncertainty causing said affection to the claimant.

Second, the Supreme Court found that Cepas had effectively demonstrated the existence of a justiciable case, as it both proved its status as a taxpayer in the Province of Cordoba and substantiated that it had paid the gross income tax at the higher rate that it deemed unconstitutional. The Court further noted that the Province’s defense of the challenged regulations and its express denial of Cepas’s claim reinforced the existence of an actual controversy.

Third—and crucially—the Court expressly stated that, under such circumstances, a taxpayer is not required to “provoke” an administrative action by breaching the contested provision in order to access judicial review.

Fourth, as to the merits of the case, the Court adhered to the reasoning set forth in “Bayer S.A. v. Province of Santa Fe – Declaratory Action” and “Harriet y Donnelly S.A. v. Province of Chaco – Declaratory Action,” holding that the imposition of a differential tax rate based on the location of the taxpayer’s production facility is unconstitutional.
 

Why is this decision important?

The ruling sets an important precedent regarding the admissibility standards for tax declaratory actions and paves the way for a more flexible interpretation in cases where no formal administrative act has been issued due to the taxpayer’s compliance with the provision being challenged.

Although the possibility of seeking judicial review without prior administrative action had already stems from precedents such as “Doma y Folklore” (Fallos 341:101), the Cepas ruling appears to advance to a broader doctrine that expands the scope of matters that may be brought through declaratory actions.

Accordingly, the Cepas precedent gains particular relevance as a strategic tool for taxpayers, especially in an economic context where fiscal pressure and revenue needs may at times result in overreach by tax authorities at all levels of government.