Two tobacco who were benefited by a precautionary measure by which they avoided paying taxes suffered a judicial setback in the face of a claim from the AFIP. It is about the same competitive advantage that Pablo Otero’s Tabacalera Sarandí maintains, by which, by not complying with the internal tax obligation, its cigarettes are sold to the public at a cheaper price, which allowed it to gain a greater market share.
From the AFIP they explained: “The internal tax on cigarettes taxes their sale at a rate of 70%; The price on which the rate is applied cannot be less than a fixed amount that is updated for inflation four times per year. The fixed tax is called the minimum tax. Some companies, through judicial precautionary measures, have avoided paying the tax on the minimum amount“.
The two tobacco companies in question are located, one in Rosario and the other in Ensenada. “On the one hand, they report a low price which means that they do not pay the minimum, and on the other, when the AFIP demands it, they take precautionary measures to avoid paying precisely that minimum,” they said from the collecting entity. Sarandí, for now, remains unscathed thanks to Otero’s lobby.
This week, the AFIP obtained two favorable rulings from Chamber B of the Federal Chamber of Rosario and Chamber I of the Federal Chamber of La Plata, which revoked the precautionary measures granted by first instance judges that allowed the two tobacco companies to avoid payment of the minimum tax.
“It should be noted that Chamber B of the Federal Chamber of Rosario highlighted that the Treasury maintained its collection position without contradictions since the tobacco company began its activity, also ruling out any animosity in the conduct displayed by the Treasury against the tobacco taxpayer,” reported the AFIP.
On the other hand, Chamber I of the Federal Chamber of La Plata, in the same sense, revoked the precautionary measure granted in favor of the tobacco company by the first instance judge, based on procedural issues.
Who is Pablo Otero, “Mr. Tobacco”?
At the center of the controversy over internal taxes on cigarettes is Pablo Otero, the so-called “Mr. Tobacco”, owner of Tabacalera Sarandí. Through the same precautionary measure, evading the tax, he managed to sell his product cheaper, which allowed him to gain market share. He has a turnover of US$800 million a year but still considers himself an SME businessman.
Tabacalera Sarandí produces the most economical cigarettes on the market, with the brands Red Point, West, Master and Kiel. It has the international giants of the industry as competitors, but it has had the advantage of State protection for years.
Otero’s lobby managed to postpone the legislative debate on the market conditions that favor him, allowing him to absorb approximately 33% of the cigarette market. The businessman maintains that his company should not pay the minimum internal tax on cigarettes because it would be unfair given the economic capacity of the large tobacco conglomerates in Argentina.
He dismisses those who criticize him and accuses them of wanting to destroy the national industry. However, despite these statements, his company has not acquired a single gram of Argentine tobacco from local producers throughout 2023, according to records from the chambers of Salta, Jujuy and Misiones.
At a time when imports are completely closed, Otero has obtained the SIRA necessary to import each kilogram of raw material required to manufacture cigarettes.
Besides, Otero’s public statements about his company’s results are not confirmed by the presentations before the AFIP. The accounts do not close. So much so that the agency has an investigation open into alleged evasion.
The company has precautionary measures to avoid paying the minimum internal tax and has achieved in the contentious administrative justice system that the rules that allow tobacco movements to be registered internally in Argentina are not applied to it.
Otero and his family have at least 19 companies around the world, with companies incorporated in the United States, Brazil, Panama and Saint Kitts and Nevis. Many of these companies have the participation of other members of the Otero family, such as Adrián and Silvia Alejandra, as well as Guadalupe Saldungaray, who is presumed to be his partner.
In the midst of these commercial operations, Otero faces a complaint from Luis Eugenio Guinle, president of the Argentine National Chamber of Tobacco Companies, for aggravated bribery, failure to comply with the duties of a public official, evasion and money laundering.
Source: Ambito
