8.138 Resolution 17 establishes that if the amount of the IVA withholdings, collections and/or payments on account are in excess of the final tax liability, the taxable person may request full or partial exemption from the regimes for withholding, collection and payments on account. In reply to a question by the Panel, Argentina asserts that the mechanism envisaged in Resolution 17 does apply for the purposes of securing exemption from the collection regimes covering import transactions.

8.139 The exemption granted - whether full of partial – applies to all IVA payments on account regimes. In consequence, the taxpayer cannot be exempted from only one specific payments on account regime, instead that exclusion would cover all the IVA payment on account regimes applicable to him.

8.140 Applications for such exemptions are processed by means of what Resolution 17 itself describes in Article 5 as an "automatic computation" for determining eligibility under the regime.²²⁵ Ultimately, this computation mechanism is no more than a composite of variables pertaining to the tax situation of the taxpayer which takes the form of a mathematical formula for processing the application.²²⁶ The condition for requesting exclusion is that the taxpayer must have a tax balance in his favour, which must be shown in the sworn declaration covering the fiscal period immediately preceding the filing date of that request. The condition to grant the exclusion is that the taxpayer has a favourable tax balance in the month immediately preceding the date of the filing of the request. This balance must be shown in the sworn declaration covering the fiscal period. The exemption is granted for six tax periods (six months) and may be renewed at the end of that time. The exemption mechanism is hence a legal precaution and is aimed precisely at avoiding a situation such as that the rate differentials for different products - depending on whether the taxpayer is registered or non-registered and/or whether the product is of the imported or domestic origin - generate a financial cost that alters the competitive expectations of the respective goods. In the final analysis, this is no more than a reaffirmation of the general principle established under Article 45 of the IVA Law mentioned above.

8.141 Argentina notes, however, that the exemption mechanism from the advance IVA, but also from the advance IG, are hardly used, as the number of situations in which the payments on account actually generate a credit in favour of the taxpayer is virtually negligible. AFIP figures show that of the entire universe of taxpayers, less than 2 percent request to be placed under the system of exemption. This clearly shows that over 98 percent of importers have had no credit balances with the tax authority as a result of their obligation to make payments on account. ²²⁷

8.142 The European Communities states that contrary to Argentina's contentions, the "exclusion" mechanism provided for in Resolution 17 does not remedy the discrimination which is the subject of the European Communities' claim. An importer may request to be "excluded" from percepciones only where it can be anticipated that those pre payments will exceed its tax liability at the end of the tax period. Moreover, the exclusion is not granted in respect of all percepciones, but only to the extent that it is anticipated that the percepciones will exceed the final tax liability.

8.143 The European Communities' complaint, however, is not concerned with those importers which find themselves in a loss position at the end of the relevant fiscal period. It is concerned with the extra financial cost imposed by the percepciones during the tax period. That cost is incurred whether or not the importer is able to credit the full amount of the percepciones within the relevant tax period.

(iii) Argument that the impact of a financial cost is limited to a maximum of 30 days

8.144 Argentina points out that the hypothesis of a financial cost affecting both products (domestic and imported) is limited to a maximum time-frame of 30 days (this being the maximum period in which an importer can be required to clear any credits or debits in his monthly position), and should there be credit balances in favour of the taxpayer (importer or domestic market operator), automatic exemption from the regime of payments on account can be immediately obtained.

8.145 The European Communities states that the financial cost may exceed 30 days if the importer does not resell the imported goods within that time period, or if, (as illustrated by the example contained in Argentina's response to Question No 45 b), the ordinary IVA charged on the re-sale of the goods is less than the combined amount of the ordinary IVA and the additional IVA collected upon the importation of the goods. Argentina seems to derive the 30 day limit from the fact that, where a taxpayer shows that it could not fully credit all IVA percepciones and retenciones within the preceding one month tax-period, it is entitled to apply for an "exclusion" under Resolution17 for the subsequent periods. That limit, however, would not apply in the case of the advance IG, which cannot be credited until the end of the one-year tax period. In addition, the European Communities recalls once again, however, that the prohibition of discriminatory taxes in Article III:2, first sentence, is not qualified by a de minimis standard. ²²⁸

(iv) Existence of a differential between generally applicable rates – issue of whether the differential is due to the tax collection method

8.146 The European Communities states that the generally applicable rate on imports to registered taxable persons is 10 percent, while the rate applicable on internal sales of goods to registered taxable persons is 5 percent.

8.147 Argentina maintains the application of different tax rates to import transactions does not affect the final determination of the tax, since the levies imposed constitute payments on account towards the tax, which have their domestic market equivalent in the respective withholding, collection and payment-on-account regimes, like the one established under Resolution 4,059.²²⁹ The nominal difference in tax rates is due to the tax collection method, which is not covered by WTO disciplines. Once the tax liability is settled, the same overall tax rates apply to imported and like domestic products. While it is true that the advance IVA on imports has a different scope than that on domestic sales, these differences are justified.²³⁰
 
8.148 In Part VI, paragraph B, of its written submission, Argentina has set forth all the reasons for which it insists that payments on account do not constitute a "tax" in themselves but an advance payment against a future tax, which is not in excess. It has also denied the existence of an additional financial burden on imported products and furthermore it has pointed out the existence of a system of reinsurance (an exemption mechanism for the IVA and its equivalent for IG, applicable to this case):

8.149 This assertion is supported by the following: the advance payments are neither taxes nor rates additional to the taxpayer's fiscal liability but are advance payments that are direct, unrestricted and deductible from the final tax liability.

8.150 The advance payments are part of a tax collection method or technique not subject to WTO disciplines and recognized as such in the compared doctrine.

8.151 The rate differential of advance payments is dictated by tax collection policy considerations and certainly not by an interest in protecting domestic industry. The rationale behind establishing different rates (always based on a tax rate of 21 percent) lies in the tax evasion loopholes observed in the marketing chains of particular products. Accordingly, these rates bear a relationship to the key operational points of concentration of funds and where economic transactions can be gauged.

8.152 As already described above, those rates differ in terms of the marketing features of certain goods, which means that the determination that in a specific case the amount (of the rate of the payment on account) is different for the imported product – which is not the case – cannot be done in the abstract, but must entail an analysis of the specific "like product" or the imported product that is a substitute or direct competitor.

8.153 To determine the rates for advance payments, the features of the transactions underlying the payments have been considered. In that regard, specific cases have been selected involving appreciable volumes of invoicing, as they perform a crucially important function of automatic surveillance through formal channels, which in turn serves the purposes of "levying" various other informal stages. This makes it possible to detect possible "upstream" and "downstream" tax evasion and also revitalises tax collection (some examples of selected cases are: Legal Aid Funds, Professional Bodies and Councils, Banking Entities – for payment of professional fees – rate: 14 percent; Entities forming part of lunch voucher systems – for the amount of each settlement – rate: 17 percent; Financial Entities – services provided abroad – rate 21 percent; Customs – for imports – rate: 10 percent, among others).

(v) The additional IVA on internal transactions does not apply to sales by non-registered taxable persons, whereas the additional IVA on imports is levied also on imports by non-registered taxpayers

8.154 The European Communities asserts that the additional IVA on internal transactions does not apply to sales by non-registered taxable persons, whereas the additional IVA on imports is levied also on imports by non-registered taxpayers. In the case of sales by a registered taxpayer to a non-registered taxpayer, the seller must collect, besides the IVA on that sale, an additional amount equivalent, as a general rule, to 10.5 percent of the net sales price (50 percent of the generally applicable IVA rate, i.e. 21 percent). No IVA is charged on the sales by a non-registered taxpayer to another non-registered taxpayer. By contrast, the additional IVA is levied on imports by non-registered tax payers at the rate of 12.7 percent

8.155 Argentina argues that while it is true that there is no payment on account on internal transactions by non-registered taxable persons, in the case of imports the requirements laid down by tax legislation make it practically impossible for a situation to arise where an operator importing goods through customs is not legally required to register as a taxable person liable to the levy. Here, the regime perpetuates an element which was found in earlier stages of Argentine tax history, but which is today anachronistic because it cannot possibly occur in practice.

8.156 This difference in treatment was due to the fact that non-registered taxable persons did not pay the tax and so registered taxable persons were unable to act as agentes de retención responsible for withholding tax on the purchases they effected. In the case of a registered taxable person, on the other hand, tax was withheld on the basis of a combined rate, i.e. a taxable base supplemented by an added-value estimate equivalent to 50 percent of the transaction.

8.157 In this connection, Argentina mentions a statement by the then Minister for Public Revenue and originator of the system, Carlos Miguel Tacchi,²³¹ to the effect that non-registered taxable persons are subject to a higher tax rate for payments on account, which tends to cover the tax corresponding to their stage, together with an additional amount under the regulations governing the levy. This is the case because, in transactions effected by a registered taxable person with a non registered person, there is no differential tax treatment, since the tax law provides that the former must act as collection agent (agente de percepción) for the latter, and is required to take in the increased tax payable by the non-taxable person at the next stage.

8.158 In addition, Argentina notes that the status of non-registered taxable persons is a voluntary one, since any individual can obtain the status of registered taxable person merely by applying to the tax authority. In view of the above, the treatment indicated facilitates payment of the levy by means of this assessment mechanism, while reducing the number of taxpayers subject to inspection.

8.159 In reply to a question by the Panel, the European Communities states that it is not aware of the existence of any measure which would, as matter of law, prohibit the importation of goods by non-registered taxpayers. The fact that Resolution 3431 lays down a different rate of percepción for imports by non-registered taxpayers confirms that those imports are "legally possible." Argentina itself does not argue that it is not "legally possible" for non-registered taxpayers to import goods. Rather, Argentina contends that imports by non-registered tax payers are "practically" impossible. Even if true, that proposition would be irrelevant. As recalled above, by now it is well-established that "the prohibition of discriminatory taxes in Article III :2, first sentence, is not conditional on a trade effects test nor is it qualified by a de minimis standard."²³² For that reason, even the mere theoretical possibility of imports by non-registered taxpayers could be sufficient to establish a violation of Article III:2, first sentence.

(vi) Situation of importers vis-à-vis entities that are not withholding agents in internal sales.

8.160 The European Communities argues that the additional IVA on internal sales is collected only upon the sales made by agentes de percepción. In contrast, the additional IVA on imports applies to all importers.
 
8.161 Argentina points out that the exemption of buyers who are required to act as withholding agents from the levy collectable under Resolution 3337 was necessary as otherwise both collection and withholding would occur in one and the same transaction, as the seller would have to collect the levy from the buyer, who would in turn have to withhold the corresponding amount under Resolution 18, on the payment to the seller.

8.162 The European Communities states that that retención, however, is withheld only on the sales made to the so-called agentes de retención (which are the same as the agentes de percepción, i.e. essentially big companies)²³³ by any registered taxpayer²³⁴ which is not itself an agente de percepción/retención²³⁵ .

8.163 It remains that the internal sales made by the agentes de percepción/retención are subject to a lower percepción than the importation of goods. Furthermore, all internal sales not involving one agente de percepción/retención as either the buyer or the seller are free from both the 5 percent percepción and the 10.5 percent retención. Likewise, the internal transactions where both the buyer and the seller are agentes de percepción/retención are exempted from those two taxes.

(vii) Situation of importers vis-à-vis certain categories of purchasers in internal sales

8.164 The European Communities states that the additional IVA on internal sales is not collected on sales to certain categories of purchasers (including in particular the agentes de percepción and the main types of financial entities), whereas the additional IVA applies to all importers.

8.165 Argentina states that financial entities governed by Law 21526 are excluded from the collection system because they ensure that collection takes place with a high degree of efficiency and security. It was therefore deemed unnecessary to include those financial entities, as they fall under the control of the country's monetary authority (Central Bank). Financial entities may only engage in financial activities as their corporate purpose does not include trading. It may therefore be inferred that import operations effected by such entities would have to do with goods intended for use in their economic activity (bienes de uso) and are therefore not subject to the tax collection regime under Resolution 3431. The exemption of buyers who are required to act as withholding agents from the levy collectable under Resolution 3337 was necessary as otherwise both collection and withholding would occur in one and the same transaction, as the seller would have to collect the levy from the buyer, who would in turn have to withhold the corresponding amount under Resolution 18, on the payment to the seller.

8.166 In response to Argentina's argument that the commercial resale of imported goods is not within the "objeto social" of financial entities, the European Communities notes that neither is the re-sale of domestic goods. Yet the internal purchase of goods by financial entities is specifically excluded form the scope of Resolution 3337.²³⁶ Even if Argentina's proposition was true it would be irrelevant for the purposes of Article III:2, first sentence. The prohibition on tax discrimination set forth in that provision is not conditional on a trade effects test, nor is it qualified by a de minimis standard.²³⁷ For that reason, even the mere theoretical possibility of imports by financial entities could be sufficient to establish a violation of Article III:2, first sentence.

(viii) Threshold amounts available for internal sales, yet not for imports

8.167 The European Communities asserts that the additional IVA on domestic sales does not apply to sales below a certain amount, while the additional IVA on imports is levied on all imports, irrespective of their value.

8.168 Argentina states that Article 5 of Resolution 3337 establishes that collection will take place only when the amount to be levied is in excess of $ 21,30²³⁸ per transaction, this stipulation having been made for the sake of the reasonable, economical and practical management of the system of collection.

8.169 No minimum amounts have therefore been set under the Resolution 3431 system of collection as it is assumed that import transactions always involve large sums. Besides, samples of a value not exceeding US$ 100 are subject neither to the payment of customs duties²³⁹ nor to the system of payments on account, which in fact indicates that there is a certain threshold that is also applicable to imports.

8.170 In response to Argentina's arguments, the European Communities recalls that the prohibition of discriminatory taxes in Article III:2, first sentence, "is not conditional on a trade effects test, nor is it qualified by a de minimis standard."²⁴⁰

(ix) Equal treatment of imported and domestic products

8.171 Argentina states that marketing transactions in the domestic market were in the past as a rule previously subject to the following payments on account, without prejudice to others applied in particular cases:

- The retención (withholding) regime under Resolution 3125, superseded by Resolution 18: (10.5 percent);

- the percepción (collection) regime under Resolution 3337: (5 percent). Imports were not subject to any system of payment on account.

8.172 In order to provide for equivalent treatment for import transactions, therefore, Resolution 3431 was enacted, establishing a single regime for imported products, for which the tax rate is currently 10 percent.

8.173 In view of the fact that import transactions can only be covered through a collection regime, since foreign sellers are not liable to the levy and cannot therefore be made subject to withholding operations, a tax rate of 10 percent was established for the collection and withholding regimes applied in the domestic market.

8.174 The European Communities states that that retención, however, is withheld only on the sales made to the so-called agentes de retención (which are the same as the agentes de percepción, i.e. essentially big companies)²⁴¹ by any registered taxpayer²⁴² which is not itself an agente de percepción/retención.²⁴³
 
8.175 The European Communities illustrates, in the table below, that it remains that the internal sales made by the agentes de percepción/retención are subject to a lower percepción than the importation of goods. Furthermore, all internal sales not involving one agente de percepción/retención as either the buyer or the seller are free from both the 5 percent percepción and the 10.5 percent retención. Likewise, the internal transactions where both the buyer and the seller are agentes de percepción/retención are exempted from those two taxes.
 

8.176 The mere fact that, under certain circumstances, imports are taxed at a lower rate than internal sales is not sufficient to exclude a violation of Article III:2, first sentence, in accordance with the well-established principle that more favourable treatment of imports in certain instances may not be balanced against less favourable treatment of imports in other cases.²⁵⁰

(x) De minimis qualification under Article III:2 of the GATT 1994

8.177 Argentina maintains that in case the panel accepts that "lost interest" is covered by Article III:2, and it is accepted that those charges are higher than those affecting domestic products, which Argentina refutes, then that concept should be governed by a de minimis criterion.

8.178 Argentina argues that all the precedents cited leading to the consolidation of the doctrine of the exclusion of a de minimis criterion in analysing the first sentence of Article III:2 were cases where what was at stake was the rate of internal taxes assessed on imported goods. In this case, the elements of fact being studied are very different from those of the cases cited. Argentina assesses internal taxes at rates identical for imported and domestic products. The higher charge being alleged by the European Communities would comprise the difference in the interest supposedly foregone by an importer for the brief period during which he was unable to set off the amount of his payment on account against his tax debits for the period and the interest that would have accrued to a purchaser of domestic goods.

8.179 Considering the borrowing rate indicated by the European Communities, which is approximately 7 percent per annum in Argentina, in the light of the differential between the 10 percent IVA levied on imports and the 5 percent on the domestic market, that lost interest would be, at the most, 0.029 percent of the amount of the levy or, otherwise expressed, 0.00029 percent of the value of the imports. Argentina notes that this example does not reflect the fact that the local product has already suffered said "lost interest" also in its previous processing stages.

8.180 The European Communities argues that the Appellate Body recalled in Japan – Liquor Taxes that the first sentence of Article III:2 is not qualified (unlike the second sentence of that Article) by a de minimis standard.²⁵¹Accordingly, "even the smallest amount of ‘excess' is too much."²⁵² In addition, the European Communities argues that that the effects of the tax differentials are far from negligible. It may be estimated that in 1999 the financial costs imposed upon the importers by the additional IVA and the advance IG amounted to 36 million pesos.

8.181 The European Communities also contests the figures put forward by Argentina and states that, on the assumption that the financial cost imposed by the additional IVA is limited to 30 days, the amount of the cost differential would be between 0.29 percent (and not 0.029 percent, as stated erroneously by Argentina) and 0.58 percent of the percepción.

(b) Claim that the IG "collected" on imports imposes a heavier tax burden than the IG "withheld" on domestic sales

8.182 The European Communities asserts that an advance IG is collected on all imports.²⁵³ While for domestic sales, a certain amount of the IG is withheld at source and can a be deducted from the definitive IG,²⁵⁴ the advance IG collected on imports imposes a greater tax burden than the IG withheld on domestic sales. The European Communities notes that the IG on imports is paid by the importer on top of the sales price invoiced by the foreign seller and has hence the effect of increasing the cost of the goods to the importer, whereas the IG on internal sales is deducted from the price charged by the seller and so does not increase the cost to the purchaser. The European Communities states that Argentina has maintained during earlier consultations, that the advance IG on imports has its domestic counterpart in the IG withheld on certain internal sales. As shown in the arguments above, those two collection mechanisms, however, operate very differently and cannot be considered to be equivalent.

8.183 The European Communities further argues that, even if the IG on imports and the IG on internal sales were considered to be comparable, the following differences in rates and coverage would still be sufficient to find that imported products are taxed "in excess of" like domestic products:

(1) the rate at which the advance IG is collected on imports (3 percent or 11 percent) is higher than the withholding rate on internal sales (2 percent or 4 percent);

(2) the advance IG is collected on imports of goods for the importer's own use or consumption. By contrast, in domestic transactions, no IG is withheld on payments by natural persons, except where they are made as a result of the exercise of an economic activity; and

(3) whereas the advance IG is collected on all imports, irrespective of their value, no IG is withheld on internal sales below certain thresholds.

8.184 Argentina argues that the European Communities makes a simplistic analysis of the rates of the percepciones (payments on account) applied to imports (3 percent and 11 percent), compared with the withholding rates (retenciones) – payments on account – applied in the domestic market (2 percent and 4 percent).

8.185 Argentina believes that the European Communities confuses the nature of the percepción (payment on account) with the tax obligation based on the type of tax liability (gains) which is assessed annually, but also disregards the fact that the annual cycle of IG assessment means that, in the case of the domestic market, the taxpayer is liable to withholding (retención) – payment on account – on a monthly basis, whereas in the case of importers, customs effects the percepción (payment on account) once only, i.e. when the goods undergo inward customs clearance.

8.186 In Argentina's view, in the case of the IG the European Communities once again makes a static reading of the rates, disregarding what could be called the cycle of assessment of the tax, which in the case of gains (ganancias) is the annual fiscal period.

8.187 Argentina notes that the 11 percent rate established under Resolution 3543 for imports of goods intended for the importer's personal use or consumption was introduced in line with its counterpart (Resolution 3,995), in order to extend the reach of the tax collection system by taking account of the real tax paying capacity of taxable persons and to help improve horizontal equity by achieving greater efficiency in combating tax avoidance, as emerges from the second and third recitals of that Resolution.

8.188 Therefore, it is clear that the rate differential criticized by the European Communities (11 percent under Resolution 3543 and 4 percent under Resolution 2784) is based on the different uses for which the goods are intended, as the first category of goods do not enter into a marketing chain and will therefore not be subject to any other collection or withholding systems.

8.189 On the contrary, the 4 percent withholding provided for under Article 14.3.2 of Resolution 2784 is applied to non-IG-registered income earners, that is, rather than being confined to a single stage, it is applied to all but the final marketing stage of the product.

8.190 It may therefore rightly be insisted that the amounts in question, whether collected or withheld, are tax payments on account. In the case of importers, the 3 percent payment on account, which is applied to both registered and non-registered taxpayers, is no more than the average of the rates levied on the internal market, which are 2 and 4 percent for registered and non-registered taxpayers respectively.

8.191 The European Communities states that the justification offered by Argentina is misguided as a matter of law because, as recalled before, Article III:2, first sentence, does not allow the "balancing" of more favourable treatment in certain instances against less favourable treatment in other cases. Moreover, the rationale for averaging the two rates is dubious, to say the least, since in practice imports by non-registered taxpayers are likely to be relatively unimportant compared to those made by registered taxpayers. The European Communities wonders why Argentina does not apply different rates to imports by registered and by non-registered importers, as it does in the case of the additional IVA.
 
8.192 As regards the 11 percent rate applied to imports made for the importer's own use or consumption, the European Communities states that Argentina's argument does not explain why the internal sale of goods for the purchaser's own use or consumption is exempted from the retención levied pursuant to Resolution 2784.²⁵⁵

8.193 Argentina argues that the withholding system simplifies collection and control by reducing the number of taxpayers subject to it. Bearing in mind that one premise of any tax system is minimizing collection costs, it is clear that in the absence of a minimum amount below which the withholding is not effected, the system would become inefficient for both the taxpayer and the tax authority.

8.194 The absence of a minimum amount for collection under the regime for imported goods established by Resolution 3543 similar to the $ 3.75 minimum established under its counterpart Resolution 2784 for domestic products, can be explained by the following facts:

(a) The number of taxpayers subject to the Resolution 2784 regime is substantially greater than that covered by the Resolution 3543 regime. If no minimum had been set for the first aforementioned regime, the tax system would have become inefficient and would not be fulfilling the premise of minimizing collection costs.

(b) As it is assumed that import transactions always entail larger sums, it was not considered necessary to set minimum amounts. Furthermore, imported samples of a value not exceeding a certain threshold are also not subject to IG.

8.195 The minimum monthly amounts not subject to withholding envisaged in Article 15 of Resolution 2784 are justified in that the importation giving rise to the payment at customs constitutes an instant taxable transaction which is completed once the operation is over. On the internal market in contrast, account is taken of all taxable transactions taking place throughout each monthly period in order to compute the withholding, in other words, a series of transactions take place, which justifies the setting of the minimum amounts in question.

8.196 The European Communities states that while Argentina contends that the exemption of sales below certain amounts is necessary to minimise collection costs. That objective, even if true, would not exclude a violation of Article III:2, first sentence. In any event, there is no reason why that objective could not be served by exempting also imports below the same threshold.

8.197 As regards the withholding mechanism described by Argentina, the European Communities argues that the IG is not withheld on a monthly basis. The truth is that, in principle, the IG must be withheld on each internal transaction at the moment when the payment is made.

8.198 Article 5 of Resolution 2784 provides in that respect that "La retención deberá ser practicada en el momento en que se efectue el pago, distribución, liquidación o reintegro del importe correspondiente al concepto sujeto a retención."

8.199 Article 13, first paragraph, of Resolution 2784 further provides that "La retención deberá practicarse sobre el importe de cada pago que se efectúe por los conceptos sujetos a retención …"

8.200 Argentina appears to be alluding to the special method for calculating the amount of the retención provided for in Article 13, second paragraph, of Resolution 2784 in connection with the situation where an agente de retención makes several payments within the same calendar month to the same person. The purpose of that method is to take into account that, in accordance with Article 15.3 of Resolution 2784, monthly payments below a certain amount are exempt from withholding.²⁵⁶

8.201 Article 13, second paragraph of Resolution 2784 suggests that while retenciones are withheld on a transaction basis, those amounts already withheld must be taken into account by the agente de retención in assessing the amount to be withheld in subsequent purchases.

8.202 The argument set out at paragraph 125 of Argentina's First Submission is not only inaccurate, but also irrelevant. Indeed, far from accounting for the tax differentials at issue, the difference alleged by Argentina would have the consequence of imposing yet another additional financial cost on imports compared to internal sales.

8.203 The European Communities holds that Argentina's argument to show why importers cannot benefit from a monthly allowance from the advance IG is not convincing. The mere fact that the advance IG is collected upon the importation of the goods does not exclude the possibility of granting a monthly allowance. As shown above, in principle, the IG is withheld also on each single internal transaction. Argentina does not explain why a method similar to the one provided for in Article 13, second paragraph, of Resolution 2784 could not be applied by the customs authorities with respect to imports.

8.204 In addition, the European Communities recalls, once more, that Article III:2, first sentence is not qualified by any de minimis standard.

Notes

²²³ See Article 5. a) of RG 18.
²²⁴ See Article 3. b) of RG 3337
²²⁵ See Article 5, RG 17.
²²⁶ The document, General Instruction 373/97, is attached as Exhibit ARG-XXII.
²²⁷ This argument has been made under the IVA and IG exemption mechanisms.
²²⁸ See Japan – Taxes on Alcoholic Beverages, Op. Cit., p. 23.
²²⁹ See Exhibit ARG-XX.
²³⁰ For an analysis of this argument, see the discussion below regarding the defence under Article XX (d).
²³¹ee his Article "Revolución Tributaria en la Argentina" Boletin DGI 500, August 1995, page 877. et seq.
²³² See Japan – Taxes on Alcoholic Beverages, Op. Cit., p. 23.
²³³RG No 18, Article 2.
²³⁴bid., Article 4.
²³⁵ Ibid., Article 5 a).
²³⁶ See Article 3 c) of RG 3337.
²³⁷ See Japan – Taxes on Alcoholic Beverages, Op. Cit., p. 23.
²³⁸ Exchange rate: $1 = US$1.
²³⁹ Article 560 of the Argentinean Customs Code: "Samples are objects representing a specific category of finished goods, intended exclusively for exhibition or demonstration purposes with a view to concluding trade transactions involving those goods that it is planned to produce, provided that the quantity of samples for either purpose does not exceed what is usual in such cases."
²⁴⁰ See Japan – Taxes on Alcoholic Beverages, Op. Cit, p. 23.
²⁴¹ RG No 18, Article 2.
²⁴² Ibid., Article 4.
²⁴³ Ibid., Article 5 a).
²⁴⁴ Article 4 of RG 18.
²⁴⁵ Article 1 of RG 3337.
²⁴⁶ Article 3 b) of RG 3337 and Article 5 a) of RG 18.
²⁴⁷ Articles 2 and 8 of RG 18.
²⁴⁸ Articles 1 and 2 of RG 3337.
²⁴⁹ Article 1 of RG 3337 and Article 2 of RG 18
²⁵⁰ Panel Report on United States - Measures affecting the Importation, Internal Sale and Use of Tobacco, adopted on 4 October 1994, paragraph 98. In support of this conclusion, the Panel referred to the "no balancing" principle established with respect to Article III:4 by the Panel report on United States - Section 337 of the Tariff Act of 1930, adopted on 7 November 1989, BISD 36S/345, 387. This principle was restated by the Panel report on United States Standards for Conventional and Reformulated Gasoline, Op. Cit, at paragraphs 6.14 6.15.
²⁵¹ See Japan – Taxes on Alcoholic Beverages, Op. Cit., p. 23.
²⁵² Ibid.
²⁵³ See RG 3,543.
²⁵⁴ See RG 2,784.
²⁵⁵ Natural persons are required to withhold the IG only where they make a payment to a taxable person as a result of the exercise of an economic activity. See the European Communities' First Submission, paragraphs. 68 and 96 (2), and Article 3 f) of RG 2784
²⁵⁶ See European Communities' First Submission, paragraph 67 and Article 15.3 of RG 2784.