Argentina: Unconstitutionality of the Minimum Presumptive Income Tax. New pronouncement of the Supreme Court of Justice

The Supreme Court ruled, once again, that the Minimum Presumptive Income Tax in the Diario Perfil SA c/AFIP-DGI case is unconstitutional, in line with the June 2010 ruling in the Hermitage SA case.

In the most recent ruling, the Court confirmed the position taken in the previous case, stating that, since the tax is based on the presumption of the existence of a minimum income – inferred by the existence or maintenance of assets – the reliable verification of the non existence of such presumptive income proves the iniquity of said legal provision. The Court further stated that it is not necessary to prove the impossibility or inability of the assets to generate the income presumed by law, but simply that such income did not exist.

Within this context, and even though the tax has not been declared unconstitutional by the Court, companies that demonstrate recurring losses in previous years now have the possibility to have the tax reimbursed.

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