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13.4.2. Specific TP Issues

Intra-Group Services

The following factors are to be considered while determining the arm’s length price for intragroup services:

  • Nature and scope of the services;
  • Need for their provision for the policyholder of the service or services and the conduct of the parties;
  • The terms of the provision and that the service has been provided or is expected to provide a benefit or economic value to the entity that pays it; and
  • Whether or not they involve industrial, commercial or scientific experiences, technical assistance or, the transfer or assignment of intangibles are considered.

Intangible Property

The following factors are to be considered while determining the arm’s length price for transactions involving the intangible property:

  • The arm’s length price for transactions involving intangibles is evaluated in relation to development, enhancement, maintenance, protection and exploitation of the intangible property;
  • The magnitude and degree of importance of the activities exercised by the taxpayer is considered while evaluating the arm’s length price; and
  • Whether the taxpayer participates in strategic decision-making, monitoring of research and development activities, use of tangible and intangible assets or controls risks, and the contribution to the value chain of the intangible property.

Loading Date Price Method

Since 2003 a new method, the Loading Date Price Method, has been employed to assess Argentine source income deriving from exports of commodities sold to foreign-related intermediaries that fulfill a three-prong-test. The Loading Date Price Method applies as long as the foreign intermediary: (i) does not have a real presence in its residence country with a PE where the business is managed; (ii) its principal activity consists of either the production of passive income or the trading of goods from or to Argentina or with other members of the same economic group; and (iii) its international trade transactions with members of the same economic group are higher than 30% of the total amount of operations carried out during the year. In those cases, the statute deems the “best method” to assess the Argentine source income from exports to be the market price prevailing as of the date in which the goods are shipped, regardless of the price effectively agreed upon at the time of execution.  Nonetheless, if the agreed price is higher than the price prevailing as of the date of shipping, the higher price will determine the value of the transaction.

Effective 1 January 2018, in respect of import and export transactions involving related parties (i.e., either exporter or importer or intermediary are related), the international intermediary is required to prove that intermediary’s remuneration is in line with the risks assumed, the functions carried out, and the assets involved. Further, the Argentine exporter is now required to file the agreements to support the pricing in respect of export transactions with an international intermediary who is a related party or resident of non-cooperating or low or no-tax jurisdictions. Specific rules have been introduced in respect of operations with intermediaries and for goods with quoted market prices.

Permanent Establishment (‘AOA Approach’)

In 2017, Argentina had included the Authorised OECD Approach for the attribution of profits to a permanent establishment (AOA) in the domestic legislation. Further, in relation to recognition of the existence of a permanent establishment in case of preparatory or auxiliary activities under BEPS Action point 7, Argentina adopted the changes for its MLI covered agreements (once the MLI enters into force for Argentina), and signed or is in the process of (re)negotiating treaties including the Action 7 recommended changes.  

Financial Transactions

The following factors may be considered for comparative analysis (either individually or by business lines) while determining the arm’s length price for financial transactions:

  • The commercial and financial relationships between the parties involved;
  • Elements that reflect and influence the economic transactions such as the amount of capital or loan, the currency in which the transaction is carried out, repayment terms and scheme, guarantees, debtor's solvency, effective repayment capacity, interest rate, and the amount of commissions;
  • The conditions of the transactions being compared must be taken into account, considering the nature of the transactions, the conduct of the parties and the agreements between them, considering the elements, conditions, or circumstances that reflect to a greater extent the economic reality of such transactions and those that influence them in view of the set of economic linkages;
  • The financial and economic capacity of the provider of the financial benefit and the receiver of the benefit; and
  • The group's credit rating may be used to determine the price of the financial benefit where the group's implicit support for the borrowing company creates difficulties in reliably evaluating the controlled transactions.