Minimum Presumed Income Tax Not Applicable to Taxpayers with Losses
On 18 May 2017, the Federal Tax Authority (FTA) issued General Instruction No. 2/2017, instructing its legal offices to desist from all Minimum Presumed Income Tax (MPIT) claims initiated against entities for fiscal years where the entity registered losses (from an accounting standpoint).
MPIT. The Supreme Court's position regarding taxpayers that register losses
The MPIT is levied at a national level and is applied at the rate of 1% to assets located in Argentina and abroad. It is a tax generated on the presumption that assets owned by the taxpayer create a certain level of income. This presumption is assessed in relation to the taxpayer’s assets at the end of the calendar year.
Income tax paid in a given fiscal year shall be credited against the tax liability arising from MPIT for the same fiscal year. If there is no income tax to pay, the payment on account of the MPIT may be carried forward against the income tax liability corresponding to the succeeding 10 fiscal years.
In the precedents Re: Hermitage and Diario Perfil S.A., the Supreme Court decided that if taxpayers had losses in a given fiscal year, they are entitled to ask for the reimbursement of the MPIT paid in such fiscal year.
Consequently, if taxpayers had losses in the past and if MPIT was paid in any of the fiscal years in which taxpayers had such losses, taxpayers are entitled to ask for the reimbursement of the MPIT paid in the years in which they had losses.
FTA General Instruction 2/2017
The doctrine set by Hermitage and Perfil was ratified by the FTA by means of General Instruction No. 2/2017, which not only instructs its Legal offices to desist from ongoing MPIT claims, but also confirms Hermitage and Perfil as the standard to be followed for purposes of determining if an MPIT claim.
The Instruction makes a careful examination of the Supreme Court rulings, and concludes that if a taxpayer demonstrates that the income presumed by the MPIT rules during a fiscal year did not exist (as it would be the case when the taxpayer register looses), the MPIT becomes inapplicable.