Argentina suspends P&G operations

ARGENTINA’S national tax agency has ordered consumer products giant Procter & Gamble  to suspend its operations, after it accused P&G of tax fraud. The suspension covers P&G’s taxpayer identification number, its operations in currency exchange markets, and from its registry of importers and exporters.

The Federal Administration of Public Revenues (AFIP) said the maker of Tide, Head & Shoulders and Oral B overbilled imports from Brazil through a Swiss subsidiary by USD 138 million as a way of getting currency out of the country. “P&G funneled currency abroad and hid income that was subject to tax in Argentina,” said AFIP in a statement on Sunday.

P&G said it pays all the taxes it owes in every country it operates. “We don’t pursue aggressive tax/fiscal planning practices as they simply don’t produce sustainable results,” stated P&G spokesman Paul Fox on Monday.

P&G also said that it values "our relationship with the country of Argentina”, which it said accounts for about 1% of its total sales.

The AFIP said P&G must reimburse the Central Bank the foreign currency that it illegally took out of the country, and pay any related penalties and money owed from income tax evasion.

“We have to put an end to these tricks used by international companies,” said Ricardo Echegaray, head of AFIP. “Global companies can’t manage their profits by cheating the state.”