New simplified transfer pricing regime introduced

Argentina’s tax authorities published a resolution (General Resolution 5.010) on 18 June 2021 that introduces an optional simplified transfer pricing regime aimed primarily at taxpayers carrying out insignificant cross-border intercompany transactions, with a view to relieving the administrative burden on such taxpayers. Taxpayers that opt into the simplified regime need not file a transfer pricing study or the affidavit statement, Form 2668. GR 5.010 applies as from the date of publication and is applicable to fiscal years ended in December 2020 and thereafter.

Simplified regime

GR 5010 introduces a simplified transfer pricing regime for cross-border transactions of qualifying taxpayers. To use the simplified regime, a taxpayer must satisfy one of the following conditions:

Have total annual revenue that is less than the maximum sales thresholds set for "medium-sized tranche 1" companies and comply with all of the following:
- Not have recurring losses in the reporting tax year and the two prior tax years;
- Not undergo a business restructuring in the reporting tax year and the two prior tax years;
- Not engage in transactions with related parties or parties domiciled in non-cooperating, low-tax or no-tax jurisdictions that involve royalties, licensing rights or R&D agreements in an amount that exceeds 1% of the highest amount set for businesses in the medium-sized tranche 1 category;
- Not provide to, or receive services from, related parties or parties that are domiciled in a non-cooperating, low-tax or no-tax jurisdiction in an amount that exceeds 1% of the taxpayer’s total revenue; and
- Not be a borrower or lender in loans with nonresident related parties.
Have total annual revenue from nonresident related parties that does not exceed 2.5% of the taxpayer’s total revenue and comply with all of the following requirements:
- Not have recurring losses in the reporting tax year and the two prior tax years;
- Not undergo a business restructuring in the reporting tax year and the two prior tax years;
- Not engage in transactions with related parties or parties domiciled in non-cooperating, low-tax or no-tax jurisdictions that involve royalties, licensing rights or R&D agreements in an amount that exceeds 0.5% of the taxpayer’s total revenue; and
- Not engage in any import and export transactions that involve an international intermediary.
Qualify as an exempt entity in accordance with certain provisions of Argentina’s Income Tax Law and be in possession of an exemption certificate issued by the Argentine tax authorities.
Only carry out import and/or export transactions with third parties (that are not domiciled in non-cooperating, low-tax or no-tax jurisdictions) where the annual aggregate amount exceeds ARS 10 million but is less than ARS 60 million.

Taxpayers that belong to a multinational group that is subject to country-by-country reporting requirements and companies that must submit a master file or that choose to file a sworn statement (indicating that the master file presented in the preceding fiscal year is applicable) are not permitted to participate in the simplified transfer pricing regime.

Taxpayers that opt for the simplified regime must file a specific form (i.e., Form 2672, “International Transactions’ Simplified Regime”) for the reporting tax year. The taxpayer must attest in Form 2672 that the prices of its related party transactions have been agreed upon as though the transactions were concluded between independent parties and without the intervention of an international intermediary.

The deadline for filing Form 2672 is between the 23rd and 27th day of the sixth month following the close of the fiscal year, with the precise date depending on the taxpayer’s tax identification number (although different deadlines apply for fiscal years closing between 31 December 2020 and 31 December 2021 due to the COVID-19 pandemic).

The Argentine tax authorities may request a transfer pricing study from a taxpayer that opts into the simplified regime where the taxpayer’s transactions in the relevant fiscal period exceed a total of ARS 3 million or ARS 300,000 per transaction. The taxpayer must submit the transfer pricing study and relevant work papers within 45 days of a request by the tax authorities.

Other changes

In addition to introducing the simplified regime, GR 5.010 revises the requirements relating to the selection of comparables and extends the deadlines for submitting the new Form 2672, as well as the transfer pricing study and Form 2668.

With respect to comparables, GR 5.010 provides that the selection of comparable operations and entities may not include companies that have operating losses (before or after comparability adjustments), unless it is demonstrated that such losses are a characteristic of the business and the conditions that led to the loss are not the consequence of factors that affect comparability.

The deadlines for submitting the new Form 2672, the transfer pricing study and Form 2668 corresponding to the fiscal periods ended between 31 December 2020 and 31 December 2021 (both inclusive) are changed from the 23^rd to the 27^th of the sixth month after the close of the tax year to the 23^rd to the 27^th of the ninth month.

Ariel Efraim
aefraim@bdoargentina.com

Luis Braini
lbraini@bdoargentina.com