“Kimberly Clark S.A. (TF 36115-I) c/ Dirección General Impositiva s/ Recurso Directo de Organismo Externo”.
In this case, the Argentine Tax Authorities are challenging the deduction of interest expense and exchange differences for a loan entered into between Kimberly Clark Argentina and its related foreign company Kimberly Clark Irish Finance Corporation, since it considered that such loan was used for the payment of dividends in the Argentine subsidiary and not to finance the company’s commercial activity.
Thus, the loan agreement, the board minutes approving the payment of dividends and the movements of the Argentine subsidiary’s bank account were analyzed in order to identify whether the purpose of the loans was to finance the company’s commercial activity or to pay dividends.
Particularly, the Chamber had special consideration for the movements in the company’s bank account, considering that on the same day, the company had received a credit for an amount practically similar to the amount of the dividends to be paid and had made a debit of funds from the same account, coinciding with the amount of the dividends paid.
Previously, the distribution of dividends and the maximum loan limit of the commodatum agreement between Kimberly Clark Argentina and its related foreign company Kimberly Clark Irish Finance Corporation were approved at a shareholders’ meeting.
Thus, considering what was previously described, with respect to the deduction of interest and exchange differences related to the loan, the Chamber considered applicable the doctrine of the judgment “INC S.A.” of the Supreme Court of Justice of the Nation, inasmuch as it is applicable to business entities in terms of deduction of expenses, the “principle of belonging” o “principle of patrimonial affectation”.Therefore, only those expenses aimed at obtaining profits or maintaining their generating source are deductible, and therefore the deduction of interest and exchange differences made by Kimberly Clark Argentina in relation to the loan received does not correspond.
NATIONAL CHAMBER OF APPEALS IN FEDERAL ADMINISTRATIVE MATTERS
ROOM III
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