Congress is about to pass a new bill that includes a series of reforms to the Tax Procedure Law, which allegedly aim at enhancing the fight against tax evasion in Argentina. The bill follows on the back of the initiatives launched in late 2003.

Among the amendments contained by the new bill, the proposal to create an electronic domicile in which taxpayers would get any formal notification from the tax authorities seems to have attracted the attention of most of tax professionals. In general they have called into question whether under existing conditions this seemingly email-based fiscal domicile would be secure and valid for taxpayers to receive documents and comply with their fiscal duties.

Other measure that has raised strong and widespread criticism is the official intention to enable tax inspectors to make false purchases in shops and apply a sanction if the mandatory invoice is not issued upon the sale, which could even lead to the closure of the shop. The idea of the undercover tax inspector has been strongly questioned by many specialists, who see that this initiative may be detrimental to the reputation of the tax authorities and likely have complex legal ramifications.

The bill also provides for a 120-day extension of the five-year statute of limitations of the tax authorities to claim tax liabilities and apply fines in those cases where the taxpayer is officially notified of a tax assessment procedure for a given fiscal year and such notification is received in the last semester prior to the date in which the right of the tax authorities becomes statute-barred.

In addition, the package includes the following measures:

• fines applicable to taxpayers if they fail to file informative affidavits, which would amount to Ps10,000 ($3,400) or even up to Ps20,000 ($6,800) if the obligation is unfulfilled by an entity that pertains to a foreign person; and
• tax authorities can seize, with the assistance of the security forces, merchandise shipped out without the obligatory documentation to support the origin of the goods.

The bill is still under debate at the senate and expected to be passed into law soon. However, many of the measures contained in the package will necessarily be subject to further ruling from the executive and the tax authorities before becoming applicable. If the bill is passed as it is known so far, further regulation will be vital to determine the actual outcome and effectiveness of the new provisions.

Gustavo Wunder (gustavo.wunder@ar.pwc.com), Andres Edelstein (andres.m.edelstein@ar.pwc.com), Buenos Aires