The Federal Tax Distribution Regime and the jurisdiction of the Supreme Court of Justice

The Federal Tax Distribution Regime limits the tax authority of local jurisdictions, i.e., of the Autonomous City of Buenos Aires and the different provinces.

Since the ruling in case “El Cóndor”, of December 7, 2001, the Supreme Court of Justice has upheld that a conflict between a local law and the Federal Tax Distribution Law was a federal issue and authorized the original jurisdiction. In practice, this meant that when local jurisdictions exceeded the abovementioned limit, taxpayers could present their case directly to the Supreme Court.

On May 5, 2009, the Federal Supreme Court of Justice ruled in the “Papel Misionero S.A.I.F.C. c/ Misiones, Provincia de s/ acción declarativa” case and explicitly abandoned the rule established in the “El Cóndor” case. This means that any conflict between a local regulation and the Federal Tax Distribution Law does not open, single-handed, the federal jurisdiction, or the original jurisdiction before the Supreme Court of Justice. Possibly, and as long as the corresponding requirements are fulfilled, this instance could be reached through a federal extraordinary appeal to the Supreme Court.

The significance of this ruling lies in the fact that its case law could deprive taxpayers of a reasonably effective legal proceeding, and will force the discussion of these issues on the local justice system fulfilling, when necessary, the solve et repete requirement (payment in advance).