Published on : Nov 04, 2014
The national tax agency of Argentina has convicted US consumer goods company Procter & Gamble and suspended it from operating in the country on the accusation that it committed fraud while sourcing dollars abroad.
The agency stated that P&G Argentina presented records of transactions overbilled by US$138 million in its imports of personal hygiene products, razors, shaving blades and diapers.
Majority of these products came from Brazil, but the payment was done by a trader in Switzerland, a transaction that allowed P&G to garner dollars out of the country by evading taxes to substantial levels.
Ricardo Echegaray, Argentina’s chief tax collector, stated in a statement that the main goal of such strict action is to make P&G return the dollars it should have practically paid against custom duties and the
income tax it evaded due to the malpractice done in transfer prices.
He also added that there is a pressing need to end cheating of this kind done by international companies. Such cheating acts strip a country the funds that go for public, healthcare, education and other services.
P&G has also failed to declared imports worth US$19 million in its tax filings. P&G, well known for brands like Pampers, Duracell, and Gillette, has not yet commented upon the matter and its plan to answer the suspension.
The tax agency stated that it has filed the complaint and presented accusations in front of the court along with the request that P&G managers not be allowed to leave the country until the case is resolved.