Seven Years After The 'Laboratorios Raffo' Case: It Is Illegal To Levy A Municipal Tax ('Tasas Municipales') On Companies Which Do Not Have An Authorized Establishment Within Municipal Jurisdiction

Considering the judgment by the Argentine Supreme Court of Justice, it is imperative that the Municipality of Posadas reviews its position which involves claiming the payment of a retributive tax in absence of its required taxable event: the existence of an establishment or deposit where divisible services funded by the collection of such tax can be actually provided.

Almost seven years ago, on June 23 2009, the Argentine Supreme Court of Justice issued a judgment as a result of the appeal filed by Laboratorios Raffo S.A. against the decision pronounced by the Superior Court of Justice of the Province of Córdoba in favor of the tax assessment made by the Municipality of Córdoba with respect to the “Contribución que incide sobre el Comercio, la Industria y las Empresas de Servicios” (“CCIES”), a general services municipal tax.

The Argentine Supreme Court of Justice reaffirmed the position stated in the “Compañía Química” case (Fallos 312:1575, judgment dated September 5, 1989). Therefore, to determine the lawfulness of any tax, its legal nature must be analyzed by the Court. This examination is not merely academic or theoretical as it gains practical relevance because the taxable events differ in each kind of tax (taxes -“impuestos”, retributive taxes -“tasas”- and taxes levied for special purposes “contribuciones especiales”) and the actual configuration of the taxable event in each case determines if the tax must be paid or not.

The Argentine Supreme Court of Justice described the CCIES as a retributive tax and later on, analyzed if the tax was applicable to Laboratorios Raffo considering that the company commended the promotion of its products to a pharmaceutical sales representative that resided in the City of Córdoba but lacked an establishment or deposit of any kind within its jurisdiction.

The Argentine Supreme Court of Justice concluded that the position of the Municipality of Córdoba, according to which levying a retributive tax on the grounds of the provision of several general services considered as a whole (e.g. control of buildings; the coordination of transportation; the necessity of ordering the transit and regulation of parking spaces) is legal, does not satisfy the essential requirement applicable to all retributive taxes: the collection of such taxes requires a concrete, effective and individualized service, referred to something not less individualized (act or good) by the taxpayer, a requirement that, in the Court's...