Argentina has introduced a withholding tax on export companies that avoid paying taxes on shipments to certain countries by first shipping the grain to countries with more favourable tax treatment.
The tax on the process, which the government calls “triangulation,” will mainly affect big exporters operating in one of the largest global suppliers of grain and food.
Companies that export via a third country with which Argentina has no tax treaties must pay up to two per cent of the FOB value of the goods, as an advance of income tax. If the third country does have a tax deal with Buenos Aires, a 0.5 per cent rate would apply to the advance payment.
“Some companies are doing transactions that are technically legal but that take advantage of national and international tax norms,” the government said in its official bulletin.
Argentine tax chief Ricardo Echegaray recently told reporters that eight grains shipping companies triangulated a total US$13 billion (wholesale) in grains deals last year.
The South American country is the world’s No. 3 corn and soybean exporter as well as its top supplier of soymeal animal feed and soyoil, used in the biofuels sector.
Argentina applies high taxes on exports of its main grains, ranging up to 35 percent in the case of soybeans.
— Reporting for Reuters by Maximiliano Rizzi in Buenos Aires.