The Supreme Court solves an issue related to the stamp tax

On April 15, 2004, the Supreme Court solved an issue related to the stamp tax, which has been the center of many controversies in past years. The issue was the applicability (or inapplicability) of the stamp tax to offers sent by one party and tacitly accepted by the other party. The Court resolved in favor of the inapplicability of the tax in three similar cases: “Shell Compañía Argentina de Petróleo S.A. c/ Neuquén, Provincia del s/ acción de inconstitucionalidad”, “Yacimientos Petrolífieros Fiscales S.A. c/ Tierra del Fuego, Provincia de s/ acción declarativa de inconstitucionalidad” and “Transportadora de Gas del Sur Sociedad Anónima (TGS) c/ Santa Cruz, Provincia de s/ acción declarativa de certeza”.

As stated in the summary of the facts contained in each of the judgments, in the first case Shell proposed to purchase oil from Pluspetrol Exploración y Producción S.A. by sending a written offer. Afterwards, the seller delivered the purchased oil and the parties interpreted this as a tacit acceptance of the offer. In the second case, YPF (together with other companies) sent Methanex Chile Limited, a corporation domiciled in Canada, a written offer for the sale of natural gas. The offer established that it would be deemed accepted if Methanex deposited a certain amount of money in the bank account indicated in the offer. In the third case, TGS received written offers to render gas transportation services from various companies, all of which were tacitly accepted.

In the first place, the Court understood that the intentions of the provincial tax authorities contradicted their own tax codes, because in none of the cases under analysis existed a written acceptance of the offer in the terms required by law to be subject to the tax. In general, there needs to be a written acceptance of the offer reproducing its main terms and conditions for the tax to be applicable.

In the second place, the Court understood that the way used by the parties did not coincide with the “instrumentation” required by the so-called ‘Ley de Coparticipación Federal’ (Law of Federal Co-participation). The provinces involved in these cases had adhered to this law, which defines an “instrument” as one that possesses the external features of a legal agreement by means of which a party may demand fulfillment of any obligation contained therein without the need of any other document or act. In the cases under analysis, the Court understood that it would be impossible for any of the parties to demand fulfillment of any obligation contained in the offers without referring to acts or facts different from the offers themselves. This showed that there was no “instrument”.

Finally, the Court pointed out the lack of importance of the so-called “principle of economic substance” regarding the stamp tax, because it only taxes the “instrumentation” of acts.

The Supreme Court revealed the voracity of the provinces, in the sense that they were making an unreasonable interpretation of their own tax law and ignoring the commitments assumed when they adhered to the ‘Law of Federal Co-participation’.