Tax Treaty Case Law around the Globe 2015

I. S. 20Introduction

The decision made by the Tax Court in the Petrobras case is relevant because it refers to an issue that has never been discussed before: the substantive scope of Argentinian tax treaties. From tax treaty perspective, more importantly, it indirectly refers to the extent and application of the residual wording included in Article 2.

The two tax treaties under discussion are very particular because they are the only tax treaties in force that were signed by Argentina in the 1970s and do not follow the UN/OECD Models.

The position of the Argentinian tax authorities, sustained by the Tax Court, is questionable. On the one hand, because of the underlying discussion, i.e. the nature of the minimum presumed income tax, the position does not follow the majority opinion and case law, including the authorities’ own past opinions and Supreme Court rulings. On the other, because it unreasonably narrows the extent of the residual wording of Article 2.

II. Facts of the case

Petrobras Energia Internacional S.A. (hereinafter, “Petrobras”) is a company incorporated under the laws of Argentina. Petrobras held equity participations in several subsidiaries, including, Empresa Boliviana de Re...