In light of the various precautionary measures that have been made public, some granting the request and others rejecting it, we consider it necessary to clarify certain issues.
As a first step, it is necessary to highlight that the contribution required by law 27.605 refers to a type of tax. There is agreement in the legal system that the concept of tax is defined as "any coercive distraction of wealth that the State demands by virtue of its taxing power." One of the many rulings that address the concept of tax is Camaronera Patagónica SA v. Ministry of Economy and others s/ amparo – 15/04/2014 – SCJN, determined “that the obligation has as its source a unilateral act of the State - justified by the tax power that the National Constitution grants to Congress - and its fulfillment is coercively imposed on individuals, whose will lacks, for these purposes, any effectiveness1 (Faults: 318:676). Also, “that there is no agreement of wills between the State and the individuals subject to its jurisdiction with respect to the exercise of the tax power involved in their relations, since taxes are not obligations that arise from contracts but rather their imposition and their compulsory force for collection are acts of government and public power." (Failures: 152:268; 218:596; 318:676, among others).”
Limits on the State's tax authority
The State has the power to go against the fundamental rights of citizens, both in relation to freedom and private property. These powers are known as the punitive or tax power. Notwithstanding this, the National Constitution itself establishes guarantees that act as a limit on such state power.
Law 27.605 (BO) gave birth to the tax called Solidarity and Extraordinary Contribution to Help Mitigate the Effects of the Pandemic, which provides for a one-time application of a variable rate to the assets of individuals and undivided estates exceeding a certain tax base depending on whether the assets are located abroad or within the national territory.
As can be seen, the aforementioned tax falls on the same taxable event and taxpayers that are established with respect to the tax on personal propertyThis double taxation is made up of two taxes that fall on the same assets.
Starting from the concept of double taxation -which consists of paying taxes twice on the same taxable event-, and Pay attention to the Solidarity and extraordinary contribution (law 27.605) and that of personal property coincide with the same taxable event, it could be determined that there would be double taxation.
Although it may seem like a situation outside the law, and even though we do not agree with this type of tax, the National Constitution of the Argentine Republic does not prohibit double taxation. between national taxes unlike what happens in other countries. Contrary to what happens between provincial and national taxes. Provinces are prohibited from creating taxes analogous to national taxes. Co-participation Law (L 23.548) in its article 9, paragraph b) establishes, which undertakes not to apply itself or to ensure that the administrative and municipal bodies within its jurisdiction, whether or not autonomous, do not apply local taxes similar to the national taxes distributed by this Law. Therefore, the only double taxation prohibited is between provincial and national taxes, beyond the existence of certain exceptions provided for by the indicated rule itself, such as: Gross income, Real Estate Taxes, Rates, among others.
Despite the above, double taxation between national taxes has limits. Indeed, the State's power in tax matters must be in line with constitutional guarantees. Therefore, the line to this fiscal action would be set by the following precepts.
Principle of non-confiscation
This guarantee is an implicit principle of the National Constitution, which, although not specifically mentioned, the Supreme Court of Justice of the Nation has long held that when taxation exceeds a certain level, it becomes confiscatory and unconstitutional because it means a violation of the right to property (art. 17 CN).
A tax will be confiscatory when absorbs a substantial part of the taxed capital or income (López López Luis and another vs. Santiago del Estero, Province of s/exemption from investments – SCJN – 15/10/91) (Candy SA – SCJN – 3/7/2009). Although such an ambiguous conception may be presented, it must also be kept in mind that there are different circumstances of place and time, for which reason there is no fixed rule of universal application. In some rulings it has been established that a tax will be confiscatory when it exceeds a certain amount (e.g. 33%), and in other rulings it has been established for less or more. Confiscatory nature is a guarantee that the party invoking it must demonstrate, and it will depend on each specific case. The only universal thing in this guarantee is that It must be demonstrated that the tax rate is not enough, but it will be necessary to prove that it affects the principle of reasonableness. Likewise, it must only apply to one tax. Although it will not be permitted to invoke confiscatory nature by accumulating taxes, or surcharges for interest or fines, in the face of the accusation of double taxation of national taxes, for the purposes of verifying the state of confiscatory nature, both taxes will act as if they were one. In short, when a taxpayer invokes the affectation of this guarantee, he may prove it by duplicating the two taxes that generate the controversy.
Thus, in cases where we are faced with the same taxable event that imposes the requirement of two types of taxes - national - in the face of the possible presence of a double charge, their accumulation will be valid in order to serve to prove the violation of the precept of non-confiscation.
Principle of retroactivity
This other guarantee is also an implicit principle in the National Constitution. Although it is not mentioned exhaustively, article 7 of the Civil and Commercial Code does express it. However, article 18 CN does establish it in criminal matters, restricting it in an exhaustive manner. State ius puniendi. In tax matters, the principle of non-retroactivity is closely related to that of legality, because, if the requirement exists “sine qua non” For the State, only with the sanction of a law, and from it, does it obtain the power to demand a tax. Since without a formal law there is no tax –Nullum tributum sine lege-
Thus, the guarantee of non-retroactivity in tax matters based on the principle of reservation of law and legal certainty.
Non-retroactivity and tax residency
Law 27.605 in article 2, paragraph b) third paragraph establishes, The subject of the contribution will be governed by the residency criteria under the terms and conditions established in articles 116 to 123, both inclusive, of the Income Tax Law, text ordered in 2019 and its amendments, as of December 31, 2019.
Regarding this point, the doctrine is divided when it comes to its interpretation. While some maintain that they will be Taxpayers obliged to pay are those who had tax residence until December 31, 2019, others consider that such a date establishes the validity of the regulations so that they could be used to monitor or verify whether the taxpayer is a resident. Noting that the regulatory framework in force until December 31, 2019 will be applied in order to assess resident status.
In our opinion, if the control body (AFIP) decides on an interpretation aligned with the fact that every person who was a resident until 2019 must pay taxes, even if at the time of the law's enactment they have lost such status, there would be a clear Violation of the principle of retroactivity and reserve of lawThis is because tax residency is not related to a subject's nationality. While an individual may be of Argentine nationality, this does not necessarily mean that he or she holds residency, and vice versa. Consequently, if at the time of enactment of Law 27.605, which imposes this tax, the person is no longer a tax resident, he or she would not be subject to the obligation.
Non-retroactivity and tax base
Article 9 of Law No. 27.605 provides: "When the variations in the assets subject to the contribution, during the one hundred and eighty (180) days immediately prior to the date of entry into force of this law, lead to the presumption, unless proven otherwise, of an operation that constitutes an evasive scheme or is intended to avoid payment, the Federal Public Revenue Administration may order that they be computed for the purposes of its determination."
This is one of the most discussed points by the doctrine, which can lead to a sensitive interpretation by the AFIP, based on alleged acts that may fall within the framework of irregular situations with consequences of ex officio tax determinations and/or complaints in the criminal sphere. As can be seen, Law 27.605 grants the AFIP the power to compute assets that are no longer within the assets of the active subject up to 180 days prior to the entry into force of the law.
For the analysis of this point, it is relevant to keep in mind the difference between evasion and avoidance and without entering into a guideline of the budgets that may be aligned with irregular acts that converge in the presence of an infractional situation, we can briefly maintain that evasion is that conduct that is carried out through trickery or deception, which is suitable (to deceive) with the intention of not paying a tax. Therefore, the simple purpose of not reaching the status of an obligated subject should not automatically be considered evasion, but must meet other requirements. Therefore, in cases where there may have been operations that led to the reduction of assets voluntarily, either through donation, a trust or a sale, should not constitute any illegal conduct, but simply an act that is known as choice economy that is related to the freedom of each individual to be able to plan his or her assets.
Thus, the delegation to the AFIP so that it can compute the assets up to 180 days before would become a violation of the principle of legality and non-retroactivity. By attempting to add to the tax base -for the collection of a tax- assets that a subject does not have within his/her assets, and which, if applicable, have ceased to exist prior to the promulgation of the norm. Quite the contrary, the limit of the State's power in tax matters would be put in jeopardy, mutating into absolute power banned by the CN
In this line, we can mention the jurisprudence of the Supreme Court of Justice of the Nation, Navarro Viola de Herrera Vegas v. Argentine Nation, where the need for the existence of assets within the estate at the time of the entry into force of the law was eloquently established. This obligation is based on the principle of tax capacity, because if the tax burden were being measured based on assets that are no longer within the taxpayer's orbit, such tax capacity would be violated.
Therefore, it can be established that THE CONTRIBUTORY CAPACITY MUST CONTINUE AT THE TIME OF VALIDITY OF THE LAW.
Deductible from income tax
Without intending to enter into the analysis of the determination of the net profit subject to the Income Tax, it must be kept in mind that there are certain deductions that are allowed. Among others, the Article 86, paragraph a) of the Income Tax Law, expresses, From the profits of the first, second, third and fourth categories, and with the limitations of this law, the following may also be deducted: a) Taxes and fees levied on assets that produce profits.
Therefore, taxes and fees levied on assets used to generate profits will be deductible. For example, personal property tax levied on assets that generate profits may be deducted. Taxes levied on assets that do not generate profits, or that are taxed or exempt, will not be deductible. Taxes and fees on vacant land or fields that are not exploited will also not be deductible. Consequently, the Solidarity and extraordinary contribution to help mitigate the effects of the pandemic, Since it applies in the same way as the tax on personal property, insofar as it refers to the part of assets that generate profits, it may be deducted from the Income Tax.
Justice
The Court had the opportunity to rule on the claims made by some taxpayers. Although the decision has not yet been made on the underlying issue, it has been able to warn of the presence of a danger in the delay that warns of the need to preventively suspend the tax requirement and any measure that tends to attempt collection from the State until the issue regarding the illegality or not of the tax is resolved..
"Regarding the requirement of danger in delay, it should be noted that its verification requires a careful assessment of the reality involved in order to fully establish whether the consequences that the event to be avoided may produce could reduce the effectiveness of the recognition of the right in question operated by a subsequent judgment (cf. Rulings: 306:2060). From this perspective, I consider that the danger in delay is configured in the case file. This is so, taking into account the General Resolution of the Federal Administration of Public Revenues (AFIP) No. 4930/2021 issued on February 5, 2021, by which it was provided that the extraordinary and mandatory contribution that falls on natural persons and undivided estates residing abroad, created on an emergency basis and for a single time by Law No. 27.605, expires on March 30, 2021, inclusive (see especially section F (DUE DATE), art. 9 of the aforementioned AFIP General Resolution). This rule establishes that: “The presentation of the sworn statement and the payment of the resulting balance must be made until March 30, 2021, inclusive.” Please note that such procedure is none other than the procedure for collecting the sum that the plaintiff challenges in the proceedings. On this point, I also evaluate the situation that would take place if the application of the resolution in question were to become effective with the consequent economic damage that this could mean for the plaintiff. Having established the above and within the limited cognitive scope imposed by the precautionary procedure, I consider that the requirement of the plausibility of the right should not be dealt with in this preliminary state, since that would be to advance on the merits of the issue raised, which is prohibited…”To grant the requested precautionary measure and, consequently, order the defendant to refrain from applying the provisions arising from Law 27.605 - in force as of 18/12/20 - and therefore from initiating and/or pursuing any administrative or judicial claim tending to demand it, determine it ex officio and require payment; as well as refrain from seizing on its own, or judicially demanding precautionary measures of any kind to safeguard that alleged credit or initiating actions in this regard under the Tax Criminal Regime Law (Law 27.430), until the 3-month period granted in the Recital is met. IX) of this resolution"- (according to CAF Case 735/2021 – SCANNAPIECO, ALEJANDRO RAUL v. EN-AFIP s/AMPARO LAW 16.986 – ruling March 2021 – Federal Administrative Litigation Court No. 8)
Conclusion
As can be seen, there are different issues that invite the analysis of this new tax and its possible impact on primary tax guarantees. From which it can be concluded that the principle of non-confiscation must be analyzed in each specific case and can never be generalized through a universal law.
With respect to the path to enter into the Justice system for the review of these types of effects, we note that not in all cases the action would be the amparo remedy prescribed in article 43 of the CN. In order that the amparo route is expeditious and may encounter limitations at the time of the evidentiary means necessary to reliably prove the presence of a situation of confiscation in the application of the tax, which will surely be subject to the need for acute accounting expertise. Remembering that other types of actions also make possible the treatment of precautionary measures in pursuit of the suspension of the effects of the norm that requires the tax until the issue that calls for the claim of illegality of this tax for affecting constitutional precepts is resolved. In short, its unconstitutionality.
Felipe Coronel de la Torre is a lawyer and member of the Guifecor and Associates Law Firm
The author is a lawyer, Master in Tax Law and Specialist in Customs Law.
