Argentina Suspends P&G’s Operations After Accusing It Of Committing Tax Fraud

Argentina has accused the world’s largest consumer-products company Procter & Gamble, or P&G, of tax fraud and has suspended the company’s operations in the country. P&G has been accused of increasing the value of imports on its books locally in order to reduce its tax burden.

The country’s tax officials reportedly allege that the Ohio-based company committed tax fraud related to imports from Brazil, which were billed through a subsidiary in Switzerland for $138 million. The alleged fraud was mainly connected to the import of hygiene products from Brazil, including razors and other products. The company, which has been in Argentina since 1991, has three manufacturing plants and two distribution centers in the country.

"Global companies can't manage their profits tricking the state, evading taxes and moving currency out of the country because their irregular behaviors impede the development of the nation,” Ricardo Echegaray, head of Administración Federal de Ingresos Públicos, Argentina’s tax agency, said, according to Associated Press, or AP.

As part of the investigation, Argentinian authorities have also sent information to the U.S. Securities and Exchange Commission, BBC reported, citing local officials.

“P&G funneled currency abroad and hid income that was subject to tax in Argentina,” a statement from the website of Argentina's President Cristina Fernández de Kirchner said, according to Reuters, adding: “We have to put an end to these tricks used by international companies.”

P&G, which clocked net sales of $83.1 billion in 2014 with Latin America contributing 10 percent of overall revenues, reportedly responded to the allegations by saying that it is trying to understand the full extent of the accusations against it.

“We don't pursue aggressive tax/fiscal planning practices as they simply don't produce sustainable results," Paul Fox, a spokesperson for P&G said, according to Reuters.

Argentina has been facing financial troubles since 2001, when it defaulted on $100 billion of bonds sold offshore. Last month, Argentina said that it will sell about $1 billion in U.S. dollar-linked bonds, to raise funds in the country.