On May 15, the Federal Administration of Public Revenues (“AFIP”) published Resolution 4717/2020 regarding the transfer pricing regime (amended by R.G. 4733/2020 on June 4, 2020).
This resolution establishes the new documentation requirements for related-party transactions, as well as the new deadlines extended due to the COVID19.
The main changes introduced by Resolution 4717/2020 are as follows:
1. Form F.2668
This form brings together all the information previously presented in the various transfer pricing reporting forms, including form F.4501.
This requirement is applicable in the following situations:
- Entities that have had to file some kind of transfer pricing reporting return during the last two years.
- Export and import operations with independent parties when the annual amount exceeds AR $ 10,000,000 (134,304 € approx.).
- Transactions with related parties where the annual amount exceeds 3,000,000 AR $ (40,291 € approx.) jointly or 300,000 AR $ (4,029 € approx.) per individual transaction.
Form F.2668 must be submitted by the sixth month following the end of the tax year. However, due to the current situation caused by the COVID19, this deadline has been increased (and delayed by R.G. 4733/2020) for the current fiscal years based on the following schedule, equally applicable to the deadlines of the Local File and the Master File.
- Fiscal closure from December 2018 to May 2019: to be submitted in July 2020.
- Fiscal closure from June 2019 to November 2019: to be submitted in August 2020
- Fiscal closing December 2019 to April 2020: to be submitted in October 2020
The exact date will depend on the completion of the Unique Tax Identification Key (“CUIT”).
2. Local File
The new Transfer Pricing Report must be submitted when one of the following requirements is met:
- Transactions with related entities for an amount greater than 30,000,000 AR $ (402,914 € approx.).
- Entities belonging to a multinational Group obliged to submit the Country by Country Report or the Master File.
- Operations with entities in tax havens for an annual amount greater than 3,000,000 AR $ (40,291 € approx.) jointly or 300,000 AR $ (4,029 € approx.) per individual transaction.
3. Master File
A new feature is the requirement to submit the Master File for those entities belonging to a Multinational Entity Group when the following requirements are met:
- Total annual income of the Group exceeds 2,000,000,000 AR $ (26,860,962 € approx.)
- Transactions with related entities amounting to more than 3,000,000 AR $ (40,291 € approx.) jointly or 300,000 AR $ (4,029 € approx.) per individual transaction.
4. Other relevant issues
- In general the Argentine entity should be selected as tested party in the comparability analysis.
- The Profit Split method and the conditions for using other valuation methods are regulated for the first time.
- A specific regulation of financial transactions between related parties is introduced, which includes, among others, the following aspects:
- The need to prove the ability of the entity receiving the financing to repay interest and the principal (impropriety analysis) in the Transfer Pricing Report;
- The interest rate comparability analysis should consider the implicit support of the group to the borrower;
- In cash-pooling, it is established that the borrowing rate may not be higher than the lending rate.
These documentation requirements apply to tax years ending after 31 December 2018.