Compensatory Interests and Delay on Tax Payment: Significant Precedent from the Supreme Court

On September 28, 2010 the Argentine Supreme Court (the “Court”) understood that it was impossible for taxpayer to pay taxes, due to Decree 36/1990 that prevented taxpayers from withdrawing fixed-term deposits from banks. Moreover, taxpayer communicated this situation to the Administrative Tax Authority and paid the tax shortly after the Government ordered the release of the funds. This precedent was about the Tax on Cigarettes but in our opinion the rules may be extended to other taxes.

The Court’s main argument was that whenever Tax Law does not provide a specific solution, it may be sought in Civil Law. Thus, the Court based its decision on Section 509 of the Argentine Civil Code that exempts debtors from responsibility if the debtor proves that the delay in payment could not be attributed to the debtor. The Court has followed a precedent dated from 1982 “Ika-Renault S.A.I.C. y F. s/ recurso de apelación”.

This is an important precedent because the Court allowed the taxpayer to prove all the diligence and precautions carried out, which exempted the company from compensatory interests and the tax update (actualización). 

Should taxpayer have paid these sums in the first place, and if certain requirements are met, it may be analyzed if a reimbursement claim is feasible.