Comments on General Resolution 4717/2020 on Transfer Pricing

Critical Analysis of General Resolution 4717/2020

This technical study details the most controversial aspects of the regulations that replaced the historic GR 1122/2001 in Argentina. The authors highlight the following pillars of conflict and innovation:

• Tested Party Restriction: The legitimacy of mandating an exclusive analysis of the local subject's situation is questioned, as it limits the ability to choose a foreign entity even when the latter has simpler functions and more reliable comparables.

  
  

• Intermediary Operations: The "exorbitant burden of proof" imposed on local exporters and importers to verify the substance and remuneration of international intermediaries is analyzed, even when these intermediaries are not directly related.

  
  

• Transactional Net Margin Method (TNMM): A discussion on the composition of profitability indicators and the exclusion of financial or extraordinary results, aimed at closing previous interpretative disputes with the Tax Authority.

  
  

• Commodity Exports: Criticism of the selective adjustment methodology and the use of quoted prices on nearby dates, warning of the risk of departing from the international standards of the BEPS project.

  
  

• Benefit Analysis: Implementation of criteria to evaluate the economic value of intra-group services, where duplicated expenses or those not responding to the needs of the local business line are subject to challenge.

  
  

• Effective Date and Retroactivity: Constitutional questioning regarding the application of the rule to fiscal years already closed at the time of its publication (12/31/2018), which undermines the predictability of market operators.