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Cablegate: Argentine Tax Authority Seeks Closer Ties with Irs And

VZCZCXYZ0009
RR RUEHWEB

DE RUEHBU #1795/01 2531238
ZNR UUUUU ZZH
R 101238Z SEP 07
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 9187
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/USDOC WASHINGTON DC
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUEHAC/AMEMBASSY ASUNCION 6546
RUEHCV/AMEMBASSY CARACAS 1482
RUEHMN/AMEMBASSY MONTEVIDEO 6739
RUEHSG/AMEMBASSY SANTIAGO 0766
RUEHBR/AMEMBASSY BRASILIA 6407
RUEHLP/AMEMBASSY LA PAZ SEP SAO PAULO 3525
RUEHRI/AMCONSUL RIO DE JANEIRO 2361

UNCLAS BUENOS AIRES 001795

SIPDIS

SIPDIS
SENSITIVE

TREASURY PASS IRS FOR HLOUIE, BKISSEL and FNG
EB/IFD/OIA FOR WSCHOLZ
TREASURY FOR LTRAN AND MMALLOY
E FOR THOMAS PIERCE
PASS FED BOARD OF GOVERNORS FOR PATRICE ROBITAILLE
PASS USTR FOR DUCKWORTH
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER
US SOUTHCOM FOR POLAD

E.O. 12958: N/A
TAGS: ECON EFIN KTFN AR
SUBJECT: ARGENTINE TAX AUTHORITY SEEKS CLOSER TIES WITH IRS AND
BILATERAL TAX INFORMATION EXCHANGE AGREEMENT

Ref: Buenos Aires 619

1. This is an Action Request for the Department of Treasury/IRS.
See paragraphs 2 and 8.

-------
Summary
-------

2. (SBU) The Argentine revenue authority, AFIP, wants to negotiate a
Tax Information Exchange Agreement (TIEA) with the IRS. Responding
to earlier U.S. Treasury guidance that a TIEA could only be
negotiated as part of a broader Bilateral Income Tax Treaty (BITT),
AFIP Director Alberto Abad reminded Ambassador that the US had, in
fact, recently signed a TIEA with Argentina's Mercosur partner
Brazil based only on the promise of future BITT negotiations. He
argued that the exchange of Argentine and U.S. tax data would serve
not only the interests of both nations' tax authorities, but also
further our joint priorities in combating money laundering and
terrorist finance. He suggested that initial exchanges of tax
information could be routed through the jointly managed U.S.ICE/AFIP
Trade Transparency Unit. AFIP sees the U.S. IRS as a model to be
emulated and seeks a closer working relationship through a bilateral
accord. AFIP will shortly place an attache at Argentina's Miami
consulate to better coordinate with U.S. Customs authorities on the
Container Security Initiative and also to better coordinate with IRS
authorities. Post requests that senior IRS officials planning to
attend the October 2007 International Tax Dialogue Conference in
Buenos Aires come prepared to engage and educate GoA officials on
U.S. TIEA and BITT priorities and protocols.
End Summary

--------------------------------------------- -----
Seeking a TIEA to Expand AFIP Cooperation with USG
--------------------------------------------- -----

3. (SBU) In a September 4 meeting with Ambassador, the head of
Argentina's revenue authority (AFIP) Director Alberto Abad
re-iterated his original March 2007 (reftel) request that the U.S.
and Argentina negotiate a Tax Information Exchange Agreement (TIEA).
Responding to earlier Embassy explanations (based on guidance
received from the U.S. Treasury Tax Treaty Office) that a TIEA could
only be negotiated as part of a broader Bilateral Income Tax Treaty
(BITT), Abad noted that the US had, in fact, recently signed a TIEA
with Argentina's Mercosur partner Brazil based only on the promise
of future BITT negotiations. AFIP is in regular contact with its
Mercosur equivalents, he noted, and has already negotiated
cooperation and information exchange agreements with a number of
other national tax authorities, including those of Brazil, China (in
2006), and Italy (recently in 2007). He also noted close tax
authority cooperation with Brazil and Chile and close Customs
cooperation with Uruguay and Paraguay.

4.(SBU) Abad and his DGI Tax Director (equivalent to IRS
Commissioner) Horacio Castagnola noted current strong and successful
AFIP cooperation with U.S. ICE on the Container Security Initiative
and on their joint Trade Transparency Unit (TTU). They argued that
the exchange of tax data would serve not only the interests of both
nations' tax authorities, but also further our joint priorities in
combating money laundering and terrorist finance.

5. (SBU) Abad suggested that initial exchanges of requests of
individual or company-specific tax information could be flowed
through the already active TTU jointly run by AFIP's Customs bureau
and ICE. He noted that DGI tax officials will shortly be assigned
to join their Customs colleagues in manning the TTU.

6. Background: Following AFIP's March 2007 TIEA information
request, EconCouns contacted U.S. Treasury Tax Treaty officer Henri
Louise who provided background on USG BITT protocols and models as

well as on the USG's 2007 negotiation of a TIEA with Brazil. At the
request of AFIP Tax Director Castagnola, EconCouns then presented
copies of the 1998 U.S./Venezuela BITT and the 2006 model tax
treaty. Also at AFIP's request, EconCouns met on this issue with
the Ministry of Economy's Undersecretary for Public Revenue Mario
Presa, whose office develops broad GoA tax policy guidelines. On
August 27, the GoA's Ministry of Economy Washington rep Jorge
Heilpern and Washington Embassy DCM Jose Gabolindo met with Treasury
Tax Treaty officers Kissel and Louise for exploratory discussions on
the potential to negotiate a Bilateral Income Tax Treaty (BITT).

------------------------------------
AFIP Seeks Closer Ties with U.S. IRS
------------------------------------

7. (SBU) Argentina does have some contact with the U.S. IRS now
though Argentina's membership in the Inter-American Center for Tax
Administration (Centro Inter-Americano de Administracion Tributario,
which includes Latin nations and the U.S., Canada, Spain, Italy,
France, Luxembourg and South Africa as members). But, according to
Abad, AFIP sees the U.S. IRS as a model to be emulated and seeks a
closer working relationship through a bilateral accord. AFIP will
shortly place an attache at Argentina's Miami consulate to better
coordinate with U.S. Customs authorities on CSI initiatives, Abad
said, and also hopefully to better coordinate with IRS authorities.


--------------
ACTION REQUEST
--------------

8. (SBU) Post has received country clearance requests for IRS
Commissioner of the Large & Mid-Size Business Division Frank Ng and
Commissioner of the Small Business/Self Employed Division Kathy
Petronchak to attend the International Tax Dialogue Conference to be
held in Buenos Aires October 15-19. While post understands that
these officials' current responsibilities lie in the administration
of existing tax treaties rather than in their negotiation, it would
be helpful if the IRS delegation comes prepared to (1) discuss
existing U.S. BITTs with Mexico and Venezuela; and (2) discuss other
ways in which AFIP and the IRS can cooperate and work together to
expand ties.

WAYNE

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