The Argentine tax authorities, the Administración Federal de Ingresos Públicos (AFIP), have agreed to withdraw a firm and a preliminary tax claim against Disco SA, a former subsidiary of Dutch retailer Royal Ahold.
The claim was related to the issue of bonds, worth US$350m, by the Argentine supermarket chain. The Argentine tax authorities said that Disco failed to pay value added tax (VAT) on the bond issues and failed to withhold tax on the interest paid to foreign holders of its allegedly non-public bonds. Disco has always maintained that the bonds were placed through a public offer and that taxes have been withheld and paid in compliance with applicable Argentine laws and regulations.
Ahold sold Disco to Chilean retailer Cencosud in 1994. Under the terms of the sale agreement, Ahold was to indemnify Cencosud and Disco for the outcome of these tax assessment claims.
In 2005 the claim totalled US$254.9m, including fines and interest.
The withdrawal of the tax assessment claims needs in part to be ratified by the Argentine Tax Court.
