Argentina’s transfer pricing regulations align with the Transfer Pricing Guidelines set by the Organization for Economic Co-operation and Development (OECD). Currently, the transfer pricing rules are governed by the Income Tax Law (ITL) and its amendments. Also, the domestic legislation is supplemented by Regulatory Decree N°862/2019 and General Regulation N° 4717/2020.
Arm’s Length Principle
In Argentina, the arm’s length principle requires that transactions between related parties, especially for imports and exports, follow market prices and conditions similar to those agreed upon between independent parties. If the prices or terms are different from normal market practices, adjustments must be made according to Article 17 of the ITL. Also, the legislation provisions special rules when dealing with entities in low-tax or non-cooperative jurisdictions. Taxpayers are required to provide the tax authority with the necessary information to show that declared prices align with market values, including costs, profit margins, and other data.
Related Party Definition
In Argentina, parties are considered related if one directly or indirectly controls or influences the other’s decisions, capital, or management. This includes situations where one party owns a majority of another’s capital, has voting control, shares directors or managers, or has exclusive agreements like distribution or financing. It also covers cases where a company depends heavily on another for key resources or business activities. Even dealings with entities in low-tax or non-cooperative jurisdictions are treated as related-party transactions. The rules cover a wide range of relationships beyond just parent and subsidiary companies.
Transfer Pricing Methods
The methods that can be used to determine the arm’s length price in Argentina are in alignment with OECD Guidelines, and include the following:
- Comparable Uncontrolled Price Method
- Resale Price Method
- Cost Plus Method
- Transactional Net Margin Method
- Profit Split Method
In addition to the above methods, Argentina allows for the usage of another method, which is a variation of the uncontrolled price method. This method is mainly used in commodity transactions between related parties.
Comparability Analysis
In Argentina, comparability analysis follows the rules in the Income Tax Law and its regulations. Transactions are considered comparable if there are no major differences affecting prices, profit margins, or payment amounts—or if any differences can be adjusted to ensure a fair comparison. Each transaction must be reviewed individually, focusing on how it was performed and under what conditions. Local comparables should be prioritized when possible. If multiple comparables exist, the analysis should use the median and interquartile range of prices or profit margins. Key factors like market conditions, functions, risks, and assets are also considered to assess comparability.
Documentation Requirements
Transfer pricing documentation requirements in Argentina are based on the three-layer approach that requires multinational groups to submit the following documentation to the Argentinian tax authorities:
- Master File;
- Local File, and
- Country-by-Country (CbC) report.
Local File
In Argentina, companies involved in transactions with foreign related parties or entities in non-cooperative jurisdictions must prepare a transfer pricing study (similar to a local file). This is required if total annual transactions exceed 3 million pesos or 300,000 pesos for any single deal. The study must detail the company’s structure, activities, financial strategies, and all relevant transactions. It must be submitted in Spanish (or translated) between the 23rd and 27th day of the sixth month after the fiscal year ends. Small transactions or companies below certain thresholds may be exempt.
Master File
A master file is required if the company belongs to a multinational group that must prepare consolidated financial statements or would have to if its shares were publicly traded. However, if the group’s total revenue is under 4 billion pesos and related-party transactions are small, the master file may not be needed. The master file must describe the group’s structure, business activities, risks, intangibles, and transfer pricing policies. It’s due between the 23rd and 27th day of the 12th month after the fiscal year ends. If there have been no changes since the last filing, the company can submit a sworn statement instead.
Country-by-Country Reporting
Argentina’s CbC reporting rules apply to multinational groups with annual consolidated revenue of at least 750 million euros (or equivalent in pesos). The CbC report must be filed by either the Argentine-resident ultimate parent, a resident surrogate entity (with net worth over 50 million pesos), or another group entity in Argentina if the parent company does not report or if no information exchange agreement exists with the parent’s country.
The CbC report must include income, taxes paid and accrued, capital, undistributed profits, number of employees, and tangible assets for each jurisdiction. It also lists each group entity’s ID number, name, tax jurisdiction, and main activity. The report must be filed annually, by the last working day of the 12th month following the fiscal year-end of the ultimate parent company.
Advance Pricing Agreements (APA) and Mutual Agreement Program (MAP)
While both, APA and MAP procedures are approved in Argentina, the APA procedures are not yet regulated by decree or administrative resolution, therefore currently there is not an APA program.
Mutual Agreement Program (MAP). Argentina allows taxpayers to request a MAP procedure when they believe that taxation is not aligned with the terms of a tax treaty. The MAP process can be started either by the taxpayer or by the competent authorities of the countries involved. Taxpayers must submit a request to Argentina’s tax authority (AFIP) within the time limit set by the relevant tax treaty, typically three years from when they were first notified of the taxation in question. MAP can be used to resolve issues like double taxation or disputes about the interpretation or application of tax treaties. Importantly, the MAP process does not suspend tax collection, but taxpayers can also seek relief through other mechanisms, like domestic appeals or arbitration if provided by the treaty.
Approach to transfer pricing audits
Tax authority requires that the local entity always be the tested party in transfer pricing documentation. It closely reviews cases where companies report repeated losses, especially for resellers, and audits can occur across various industries. They focus on whether the analysis methods are consistent across fiscal years and expect financial data for comparables to be well-supported by reliable sources. If taxpayers can’t provide proper supporting information, the tax authority may reject the comparables used in the analysis.
Penalties
If a taxpayer fails to submit required returns or documentation on time, they can face a fine of 10,000 pesos (or 20,000 pesos for nonresident entities). If a transfer pricing adjustment leads to unpaid taxes, an additional fine ranging from 100% to 300% of the unpaid tax may apply. The exact amount depends on how well the taxpayer complied with transfer pricing reporting and documentation requirements. In cases of fraud, the penalty can increase to two to six times the unpaid tax.
Taxation at a Glance
Argentina is divided administratively into 23 provinces and the Autonomous City of Buenos Aires, which is the federal capital of the country. Taxes are levied both at the federal level and the local (provincial and municipal) level.
In Argentina, the currency is the Argentine Peso. The official name of the Argentine tax authority is the National Tax Authority.
The table below provides a summary of the main taxation rates related to businesses:
Tax Type | Tax Rate |
Corporate Tax | 25%-35% |
VAT | 21% |
Withholding tax on dividends to non-residents | 7% |
Withholding tax on interest to non-residents | 15.05% |
Withholding tax on royalties to non-residents | 12.25% – 31.5% |
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