Scope of the Suspensive Effect of an Appeal before the Argentine Tax Court

On March 8, 2016, in “Nidera S.A.”, the Argentine Supreme Court of Justice (ASCJ) analyzed the scope to be given to any appeal before the Argentine Tax Court (ATC).

The case started with an assessment of income tax from fiscal period 2001 issued by the Federal Tax Authority. The taxpayer appealed to the ATC arguing that the assessment considered as amounts owed to the Tax Authority contained certain amounts derived from a prior assessment for fiscal periods 1999 and 2000, which had been appealed before the ATC, where a decision was still pending. The taxpayer based his position on the suspensive effects that Tax Procedural Law No. 11,683 provides in an appeal before the ATC.

The ATC analyzed the case and upheld the taxpayer’s position. The Federal Tax Authority, however, appealed such decision. The Court of Appeals on Administrative Matters revoked the decision of the ATC and forwarded the file once again to the ATC for it to issue a new decision in accordance with the position of the Court of Appeals. The taxpayer filed an appeal before the ASCJ, which was rejected. Thus, the position of the Tax Authority was finally upheld.

To reach its decision, the ASCJ analyzed the terms and intention of Section 167 of Tax Procedural Law No. 11,683, which sets forth the suspension of the obligation to pay tax debts arising from assessments made by the Tax Authority to the extent they were appealed before the ATC. The ASCJ highlighted the reasons exposed by the drafting committee of Law No. 15,265 –by which the ATC and such section were created- which aimed to protect one of the most important guarantees for the taxpayer: prior to tax payment, a full discussion of the case before the ATC must be ensured, suspending tax liability while a decision by the ATC is still pending.

According to the ASCJ, such suspension temporarily inhibits the Tax Authority from exercising its authority to claim the payment but neither the wording nor the intention of Section 167 contain legal obstacles to prevent the Tax Authority from assessing tax obligations for subsequent fiscal periods, and consider as unpaid those amounts that are still under discussion before the ATC. A different position would imply disallowing the exercise of the Tax Authority’s own powers for assessing obligations corresponding to subsequent years. In addition, the ASCJ stressed the fact that the law protects the taxpayer’s right to challenge such subsequent assessments by providing an identical sphere of discussion (i.e., the possibility of appealing before the ATC).

Based on the above, the ASCJ concluded that the assessment was valid because rather than enforcing the payment of obligations which were under discussion before the ATC, it only considered that such obligations were still owed to the Tax Authority.