Automating processes avoids future risks

By Hernán Mandará, tax and legal partner, KPMG Argentina

Despite the ups and downs in recent years due to national macroeconomic problems and constant global uncertainties, the energy industry continues to be an important focus of investment attraction for different reasons, including: 1) the development of clean energy and its potential through the Renovar program (Law 26,190); 2) the exploitation of unconventional hydrocarbons from Vaca Muerta in Neuquén; and 3) the development of mining operations for metals in growing global demand such as lithium, copper, silver and gold.

This increase in investment is associated with a greater degree of administrative complexity when it comes to paying taxes due to the large volume of information companies must manage.

Additionally, the requirements of Afip to comply with tax obligations and access tax benefits have been increasing and currently there is a need to have more details of each investment, providing a significant amount of data. For example, to calculate the tax depreciation of fixed assets, it is necessary to have the following information:

1. Registration date as Work in Progress;
2. Registration date as definitive item;
3. Differentiate the assets acquired prior to January 2018 that are not subject to inflation adjustment, except those that have been included in the tax revaluation of Law 27,430;
4. Determine the calculation of inflation adjustment of each investment year by year;
5. Specify updated tax write-offs;
6. In the case of the oil and mining industry, when applying a depletion curve amortization system, the production of the year and the reserves of each deposit must be taken into account.

On the other hand, in the case of requesting VAT recovery for some of the current regimes, it is necessary to provide the details of each receipt of the investments made, as well as the monitoring of their accounting registration.

Faced with a scenario with significant volumes of investments and a growing demand for information from the control authorities, it is necessary for the tax departments of companies to be prepared and attentive to new changes in the system, and have powerful and updated systems that allow compliance with all those requirements and tax obligations.

These automations allow tax teams to: a) obtain higher quality of information; b) reduce the time dedicated to tasks without added value; c) time savings; d) focus on fiscal planning; and e) eliminate the possibility of errors.

A system of these characteristics would facilitate compliance with reporting obligations and prevent erroneous calculations that would generate contingencies and even the impossibility of accessing tax benefits.

Technology has been providing extremely useful tools that allow automating processes that facilitate tasks and prevent errors that could lead to high economic cost for the company. They are flexible IT solutions and adaptable to the information processes of each company and are, in addition, controlled and managed by the organizations themselves.

The management of taxes in a company is more than an administrative act; correct administration has a direct impact on the internal functioning and economic results of the organization. In this sense, technology has become a strategic ally that allows optimizing processes and being better integrated internally and externally. 

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