New Ruling on Tax Claims for Advance Payments on Definitive Imports

Customs had construed that in the “Cladd ITA SA (TF 22.343-A) c/EN-DGA resol.2590/06 (expte. 604155/01) s/Dirección de Aduanas” case the temporary import regime had been breached and thus had imposed a fine for the infraction under Section 970 of the Customs Code. Additionally, Customs had claimed taxes for import duties and advance payments on VAT and Income Tax.

The importer then went to the Federal District Court to challenge Customs’ decision. Even though the court confirmed Customs’ decision on the breach of the temporary import regime, it decided that Customs could not claim the advance payments on VAT and Income Tax because it had lost its capacity as a collecting agent once the importer had already filed the corresponding tax returns.

Customs successfully appealed the district court ruling to the Argentine Court of Appeals. Branch I of the appellate court construed that the importer had not proven the actual damage that the claim would cause as it had a paying position on both taxes. The importer then appealed this ruling to the Argentine Supreme Court.

The subject matter of the dispute was to determine whether Customs is enabled to seek collection of advance payments on VAT and Income Tax applicable to definitive imports –according to General Resolutions No. 3431/91 and 3543/92- after the importer’s date for filing its VAT and Income Tax returns is due.

Firstly, the Argentine Supreme Court cited precedent and highlighted that this kind of advance payments are not directly related to taxable events related to importing the goods. Then, it continued by stating the purpose of these advance payments: in the case of Income Tax, the purpose is to anticipate the future –and potential– tax that could be applicable to all taxable income obtained by the taxpayer, and, in relation with VAT, to anticipate some of the tax that will be triggered when the good is commercialized in the domestic market. Under this framework it considers that after the date to file the tax returns for the already triggered and actual taxes, Customs loses its ability to claim the collection on the advance payments.

Finally, the Argentine Supreme Court considered that Customs loses its ability to claim the advance payments because it is the Tax Authority’s turn to collect internal taxes for those fiscal periods. In this light, the Argentine Supreme Court reversed the Court of Appeals ruling and invalidated the claim on advance payments.