Argentina: Plenary ruling of the tax court on export duties ignores the Supreme Court precedent

In brief

On 26 April 2022, the tax court issued a plenary ruling establishing that it lacks the authority to hold laws unconstitutional in specific cases. It also ruled that the executive, according to Section 755 of the Customs Code, has the power to establish export duties, against the criteria of the Supreme Court of Justice in the precedent Camaronera Patagónica.


Contents

In detail

The constitutionality of the executive to establish export duties based on Article 755 of the Customs Code is in question

Historically, the Argentina tax court, comprised of tax and customs chambers, has rejected the possibility of declaring the unconstitutionality of tax or customs laws and their regulations based on Section 1164 of the Customs Code, which prohibits this, unless there is a precedent issued by the Supreme Court on the matter. 

However, decisions of the tax court have differed on this point, and the court has declared a law unconstitutional when the matter analyzed justified it, such as in the Petroquímica Comodoro Rivadavia case, among others.

In Petroquímica Comodoro Rivadavia SA c/DGA s/recurso de apelación, the tax court found that the general delegation norm contained in Section 755 of the Customs Code (which precedes the constitutional reform of 1994 that significantly limited the delegation of tax powers to the executive) empowers the executive to set export duties. In addition, the court decided that it cannot declare laws and regulations unconstitutional unless there is a Supreme Court precedent directly on the exact matter. The case was decided by a vote of four to three by the full complement of members of the customs chambers (with the significant absence of Dr. Garbarino, defender of the positions defeated by the majority) but the members of the court's tax chambers did not participate.

Although in Petroquímica Comodoro Rivadavia the court considered the Camaronera Patagónica precedent, the majority found that it did not apply because the matter before the court in Petroquímica Comodoro Rivadavia was the unconstitutionality of Decree 793/18, which reintroduced export duties in 2018. However, Camaronera Patagónica dealt with Resolution 11/2002 of the Ministry of Economy, which reintroduced export duties in 2002.

In Camaronera Patagónica, the court concluded that export duties are actually taxes, a conclusion rejected by the majority in Petroquímica Comodoro Rivadavia. The Camaronera Patagónica court also concluded that Section 755 of the Customs Code is not a valid delegating norm because it: (i) does not establish clear and precise guidelines for the executive power to exercise its tax authority; (ii) does not establish a time limit to the exercise of this power; and, (iii) does not establish a maximum limit of the duty to be applied. The Petroquímica Comodoro Rivadavia court reached the opposite conclusion. 

Consequently, the Petroquímica Comodoro Rivadavia decision contradicts Supreme Court of Justice precedent that appears to be directly on point.

However, this decision does not necessarily finally decide this issue. Dr. Soria indicated in his dissenting ruling his view that the plenary lacked the authority to resolve the issue because the members of the court's tax chambers did not participate in the decision.

Conclusion

We believe the debate at the tax court on the issue of whether export duties are actually taxes and whether the executive has the power to set export duties is not finished. The Petroquímica Comodoro Rivadavia ruling, with its clear departure from Supreme Court precedent, has opened the doors to new questions and debates.

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