April 17, 2012

Argentina suspends Bunge from grain registry over tax dispute

Due to a dispute over taxes, Argentina has suspended Bunge Ltd. (BG) from a key grain registry.

In a statement Monday (Apr 16), tax agency Afip accused Bunge Argentina SA of evading ARS435 million (US$98.8 million) in taxes between 2006-07 by triangulating its grain trading activities through a company in Uruguay.

Afip said a federal judge has slapped an embargo of ARS250 million (US$57 million) on Bunge Argentina assets. Afip last suspended Bunge Argentina from the grain registry in March 2011 in a separate tax dispute.

Companies excluded from the grain registry face higher income taxes on domestic grain trades as well as the withholding of a 10.5% sales tax. Firms are also subject to burdensome approval requirements for domestic shipping permits.

Argentina is one of the world's largest exporters of corn, soy and related products like soyoil and soymeal. Export taxes on agriculture products are an important source of revenue for the government of President Cristina Kirchner.

Tax disputes between Afip and grain exporters are common, especially during the harvest season when grains and oilseeds are shipped to global markets.