New Criteria Regarding Valuation of Exported Agricultural Goods that Use Imported Feedstock

On July 19, 2023, the Argentine Tax Authority issued General Resolution No. 5389, partially modifying General Resolution No. 2147/06. The changes the Resolution introduced includes:
 

1. Valuation of the export of goods after the transformation of imported feedstock

In principle, customs duties are calculated on a basis determined by the valuation rules in articles 735 and subsequent of the Customs Code. Nonetheless, exceptionally, the exports already have an official price to calculate duties. This is the case of commodities export. Commodities are listed in Resolution No. 128/19 of the former Ministry of Agriculture, Livestock and Fisheries. According to Law No. 21453, all export duties and fees are calculated on an official price published by the Undersecretariat for Agricultural Markets, following their market prices.

On the other hand, Decree No. 1330 (in force since 2004), establishes the conditions under which local companies are allowed to temporarily import feedstock, use for it for production, and later export the finished goods. Originally, this regime did not establish specific regulations for valuating feedstock that did not have official prices or fell under the scope of Law 21453 (e.g., the temporary import of soybeans to export soybean oil). This lack of specific regulations caused many interpretative conflicts regarding the weighting of feedstock deducted from the value of final goods.

General Resolution No. 5389 thus modifies General Resolution No. 2147/06, which regulates the details of the Import for Transformation Regime established by Decree No. 1330/04. With these modifications, the Argentine Tax Authority has tried to settle the debate by establishing that the Customs Code valuation rules are applicable to these exports. Therefore, the official price the Undersecretariat of Agricultural Markets publishes would not apply to these exports, though it is still mandatory for the rest of the exports not within the scope of Decree No. 1330/04.
 

2. Splitting the Weighting Factor (Factor de Ponderación)

Under the regime of temporary import for industrial transformation, the overall idea is that exporters only pay duties based on the value added in Argentina. In other words, when an exporter calculates the value of transformed goods, the weighted value of the used feedstock is deducted.

However, this deduction is not simple arithmetic; a “weighting factor” calculation must be used. According to General Resolution No. 2147/06, this calculation is “the coefficient associated with each of the final products resulting from a particular production process (…) that allows the appropriate deduction of the amount corresponding to the temporarily imported feedstock”.

Pursuant to Decree No. 1330/04, until now there was only one coefficient: exporters simply deducted the feedstock’s CIF value from the export. Now, General Resolution No. 5389/23 splits this coefficient regardless of whether the export used feedstock with an official price listed in Resolution No. 128/19 or not.

If the goods use said agricultural feedstock, the coefficient will no longer depend on the CIF value. To calculate this coefficient, exporters will now have to use the lowest of the official FOB prices –as established in Law 21453– or the actual CIF value on the date of the temporary import. In short, the ‘factor de ponderación’ will now have two coefficients instead of one, depending on the feedstock tariff code.