October 24, 2014
Despegar agrees to pay*
Firm says it will drop all legal action against AFIPAfter two days of crossed accusations and legal confrontations, Despegar.com gave in, saying it will call off all judiciary actions initiated this week and will accept normalizing its fiscal situation and pay a tax debt that on Thursday it had said did not exist.
The AFIP tax bureau cancelled the closure order of the company’s offices in Buenos Aires yesterday morning and will reinstate the company’s taxpayer identification number (CUIT) as soon as possible.
“The company agreed to normalize its fiscal situation and will pay the taxes it owes. At the same time, it agreed to drop all legal actions,” a source close to the investigation told the Herald. “The key factor that helped to solve the case was the letters the AFIP sent to the Securities and Exchange Commission (SEC) and the US Embassy in Argentina.”
At the same time, the largest travel agency in Latin America issued a press release where it confirmed it has dropped all legal actions and is currently working with the AFIP tax bureau to analyze and regularize its fiscal obligations.
“Despegar.com will begin to operate normally, allowing users to book hotels, flights and other tourism services as they did before. Our more than 850 employees will return to their jobs,” the company said. “We have dropped all court actions and are working with AFIP to analyze our fiscal obligations and the regularization of our fiscal situation.”
Despegar.com’s local operations were shut down on Wednesday over allegations it used its office in the US state of Delaware to evade Argentine profit taxes. According to the AFIP, the company had five billion pesos worth of transactions but the figure it reported to the AFIP was 10 times lower — 500 million pesos. The firm has reportedly used its US office to avoid paying taxes in Argentina for the last five years.
Lawyers representing the firm were successful in obtaining a preliminary injunction with the Buenos Aires City courts. Nevertheless, AFIP appealed the injuction and because of that Despegar’s CUIT remained suspended.
AFIP also requested the courts to shut down the company’s website in order to suspend all its transactions and sent letters to the US Securities and Exchange Commission (SEC) and to the US Embassy in Argentina with details of the investigation. The tax bureau also sent the information to all the tax bureaus of the countries where Despegar.com operates so they could start their own investigations.
The judicial investigation into the financial operations of Despegar.com in Argentina began in April 2013 when local taxpayers wanting to lodge judicial complaints for the 35-percent profit tax charged on overseas travel-related purchases were unable to obtain documentation from the company proving the profit tax had been paid.
*-Clarification (March 7, 2014): A March 1 story headlined “Despegar agrees to pay” misrepresented the online travel agency’s stance with the AFIP tax bureau and should have read: “Despegar agrees to review its fiscal situation.” Despegar has agreed to review its fiscal status and to work alongside AFIP to clarify the situation but it has not recognized any tax debt. An AFIP source yesterday said the tax bureau has not determined any amount of tax owed by Despegar. Users of the online travel agent have reported in recent days that it has been delivering receipts for purchases more quickly than in the past.