Deloitte LATAM Regional Profile (Tax Controversy)

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México
Tel: +52 (55) 50807040
Email: maumartinez@deloittemx.com
Twitter: @Deloitte
Website: Deloitte.com/tax
Offices: México, Guatemala, Costa Rica, El Salvador, Honduras, Nicaragua, República Dominicana, Panamá, Colombia, Perú, Ecuador, Venezuela, Bolivia, Argentina, Uruguay, Paraguay, Chile, and Brazil

The Deloitte tax controversy practice in Latin America includes one of the largest teams of professionals and partners of any Big Four in the region, covering 18 countries. From Mexico to Argentina, Deloitte tax controversy professionals are engaged in services, including supporting clients with their interactions with tax authorities, i.e., audits, refunds, negotiations, both domestic and international, and litigation at all levels. Negotiations include formal processes, where applicable, and discussions with tax authorities during audits.

DTTL’s tax controversy practices include a strong international conflict resolution specialization, i.e., mutual agreement procedures and arbitration, as per the double taxation treaties signed throughout the region.

Our tax controversy practice handles high-profile cases for clients with a very high-resolution rate. The biggest practices are in Brazil and Mexico, with more than 100 professionals and 15 partners in Mexico City alone. Our areas of specialization include constitutional challenges, domestic and international tax controversies, foreign trade and transfer pricing, and local taxation.

Deloitte tax controversy practices in the region include former judges and high-ranking tax officials who contribute their competence to providing efficient and creative solutions to our clients’ needs, in addition to seasoned litigators and tax lawyers with many years in private practice. We are also constantly developing digital tools to further streamline our services and interaction with our clients, the judicial branch, and the tax authorities.

Our professionals also teach at prestigious educational institutions in the region and are leading members and participants in technical, industrial, and commercial forums.

Deloitte’s tax controversy practice includes former judges and high-ranking tax officials who bring innovative insight to our clients, in addition to tax lawyers with many years in private practice who have either grown within the Deloitte ranks or joined Deloitte from other successful firms.

We also have a strong practice in terms of negotiations with tax authorities, both formal and informal. Finally, our success rate in terms of litigation resolved in the taxpayer favor is well above 90%.

Deloitte is now one of the largest tax practices in the region. This means that much of the tax advice throughout Latin America is provided by Deloitte. As a multidisciplinary organization, it also means that our tax controversy practitioners have in-depth knowledge of our clients’ tax positions and their interactions with the tax authorities of their respective countries.

Deloitte has implemented digital control of litigation and controversy processes that, where available, is directly connected to the local court’s database, getting live notices of the steps in a particular process.

Mostly, Deloitte tax controversy professionals in the Spanish Latin America region excel at litigation, with their success rate supporting the taxpayer’s position being above 90%. In addition, our tax controversy practice has a very high success rate in negotiating favorable settlements for our clients, thus avoiding litigation whenever possible.

Our key service offerings

• Legal and constitutional litigation related to federal and local taxes.

• Formal and informal negotiation processes.

• International controversy solution processes, i.e., mutual agreement procedures and arbitration.

• Legal analysis of complex tax advice.

Recent wins

• Energy Industry Company (name withheld at the client´s request): Litigation against a US$30 million tax assessment. The main subject was the rejection by the Mexican tax authorities of the deduction of indemnifications paid by the client by virtue of not delivering gas as agreed in a certain contract. However, the authorities failed to consider that the client did not receive such gas from its providers due to a force majeure reason.

• The tax authority conducted an audit of the client for the fiscal year of 2010. During the audit, the tax authority made various observations that implied non-compliance with the tax obligations of the client regarding income tax, value-added tax, and a flat rate corporate tax. Consequently, we recommended that the client file a conclusive agreement before the Mexican Tax Ombudsman (PRODECON). Due to the tax authority’s observations made to the client during the audit, the potential tax assessment was US$175 million. Our recommendation was to file a conclusive agreement before the Mexican Tax Ombudsman (PRODECON) to clear the observations made by the tax authority during the audit.

• Negotiation before the tax authorities, led by Deloitte, allowed the client to see a potential US$600 million assessment reduced to a US$15 million settlement. This was an 18-month-long process that concluded in May 2022.

• The Mexican tax authority intended to determine differences in income tax, value-added tax, and flat rate business tax (IETU) for:

o unidentified bank deposits; and

o rejection of the deduction for the purchase of land reserves for IETU worth US$180 million for a construction and development group.

• Tax authorities intended to ignore a US$75 million worth of tax loss due to a spin-off for a retail group in Mexico, arguing that:

o it was not enough to transfer accounts receivable, but inventories were also required; and

o the materiality of the account receivable was not demonstrated for.

Awards

In 2022,

• Deloitte in the Americas region won the ITR Indirect Tax Firm of the Year, Tax Compliance and Reporting Firm of the Year, Tax Innovator of the Year, Tax Technology Firm of the Year, Transfer Pricing Firm of the Year, and North America Transfer Pricing Firm of the Year awards;

• Deloitte LATAM won ITR’s Transfer Pricing Firm of the Year award;

• Deloitte S-LATAM won ITR’s Transfer Pricing Firm of the Year awards for Argentina, Central America, Uruguay, and Venezuela;

• 15 Transfer Pricing leaders were recognized in ITR’s 2023 World Tax Guide from a total of 34 for all Americas including the Big Four leaders;

• 4 Indirect Tax leaders were recognized in ITR’s 2023 World Tax Guide from Colombia and Mexico;

• 13 Tax Controversy leaders were recognized in ITR’s 2023 World Tax Guide from Argentina, Colombia, Mexico, and Peru;

• 14 leaders were recognized in ITR’s 2023 World Tax guide for Women in Tax from Argentina, Colombia, Costa Rica, Guatemala, Mexico, and Peru;

• Legal 500 recognized 12 tier rankings and 35 lawyers in Argentina, Chile, Colombia, Guatemala, Mexico, and Uruguay;

• Chamber & Partners ranked Deloitte Legal Mexico and recognized 8 lawyers in Mexico, Costa Rica, Guatemala, Peru, and Uruguay. 10 professionals were acknowledged as notable practitioners across 5 jurisdictions in Mexico, Costa Rica, Guatemala, Peru, and Uruguay.

Eminent leaders

Eduardo Revilla (Mexico)

Mauricio Martínez (Mexico)

Hugo Romero (Mexico)

Daniel Martínez (Colombia)

Estuardo Paganini (Central America)

Cynthia Calligaro (Argentina)

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