Justice limits the actions of the Tax Authority (“AFIP”) in a corporate restructuring operation.

The judgment of August 29, 2023, rendered by the First Division of the National Court of Federal Administrative Contentious Matters, in the case "Clear Petroleum S.A. v. AFIP - DGI," reinforces the need for a more flexible approach when evaluating corporate reorganizations from a tax perspective, in line with previous rulings issued by the Supreme Court of the Nation (“CSJN”).

In this case, the AFIP argued that investment activity was not provided for in the bylaws of Clear Petroleum S.A. For this reason, it rejected the attempted corporate reorganization. However, the Federal Court considered that the AFIP's approach was excessively rigid, given that the expert witness analysis demonstrated that Clear Petroleum S.A. had regularly conducted investment operations prior to the reorganization process. This supports a comprehensive interpretation of the regulations and the consideration of the specific circumstances of each case.

In summary, in line with the jurisprudence of the CSJN, this judgment underscores the importance of a more flexible and comprehensive approach in the assessment of corporate reorganizations from a tax perspective, emphasizing the need to avoid excessive formal rigor.