Argentine Tax Authorities Accuses Procter & Gamble of Fraud & Currency Manipulation

Argentina’s Federal Public Income Administration, or AFIP, said Sunday that it had suspended the activities and filed charges against Procter & Gamble for alleged tax fraud and currency diversion.

The equivalent of Argentina’s Internal Revenue Service said in a communique that the company committed fraud via “import operations from Brazil that were invoiced for $138 million through an affiliate based in Switzerland.”

“In this way, the firm funneled currency to its affiliated firms abroad. The maneuver could constitute aggravated smuggling,” warned AFIP in its statement.

AFIP said that it analyzed 2,608 operations to import razors and shaving gear, hair preparations, diapers and other hygienic items and found that “overbilling” had occurred.

Due to these alleged practices, AFIP, also known as the Fisco, suspended P&G’s tax ID number, its ability to import and export as well as its authorization to operate in the currency exchange market.

In addition, the Fisco sent a notice to the U.S. Securities and Exchange Commission via the U.S. Embassy in Buenos Aires detailing the alleged irregularities committed by the multinational.

Moreover, AFIP requested an exchange of information with Switzerland and Brazil and informed the Argentine Central Bank about the alleged irregularities.

“Our main objective is for P&G to return to the Central Bank the diverted funds and pay the customs penalties and the tax on the earnings that was avoided by the price manipulation,” said AFIP chief Ricardo Echegaray.

AFIP also asked the judicial system to prevent the top officials with the local P&G affiliate from leaving the country until the multinational’s situation is resolved.

Published in Latino Daily News