TAX B2N2FITS BOOST ARG2NTIN2 BIOFU2LS INDUSTRY
has already announced a US$30m investment in a biofuel
refinery located in the province of Buenos Aires.
Vicentin, one of Argentina's leading oilseed processors
and exporters, is planning to invest US$40m to set up a biofuel
refinery in the province of Santa Fe.
It is clear that companies are investing to develop this
industry not only because they need to supply the Argentine
market, but also because production costs are much lower in
Argentina than in other countries. This is mainly due to the
exchange rate advantage. In some European countries one
litre of biodiesel costs around €1, whereas in Argentina the
production cost is around US$0.50.
An attractive legal framework with tax advantages plus
low production costs due to an exchange rate advantage
places the country in an unbeatable position to attract foreign
investments and develop a sophisticated biofuels industry.
aeonetto@onettoabogados.com.ar,
Buenos Aires.
Onetto,
Abogados,
VAT AND SEGURITISATION
MBNA EUROPE BANK LTD V HM REVENUE & CUSTOMS [2006] EWHC 2326 (CH) (BRIGGS J)
An assignment of receivables by the Bank to its receivables trustee as part of a securitisation structure did not
constitute the making of a 'supply' for VAT purposes by
the Bank.
capital under the securitisation arrangements involved
the Bank making supplies.
CONCLUSIONS
-
The assignment of Receivables by the Bank to the Jersey
SPV corporate trustee of a receivables trust under the
securitisation process (the 'Receivables Trustee') did
not constitute or involve the making of a supply by
the Bank (excluding the consequential securitisation
servicer role undertaken by the Bank separately).
-
The assignment was no more than the necessary
pre-condition to the supply of a securitisation service
to the Bank by the Receivables Trustee set up to operate that service. The Receivables Trustee had no reason
to want the Receivables for any purpose other than
as security for, and the means for the servicing of, its
borrowing under the securitisation scheme.
-
The transfer of receivables for the purpose of their
being used in the provision of a securitisation service
for the transferor is an addition to the exceptional class
of transactions which prima facie look like a supply,
but which lose that character when viewed in their
context. Other examples of such exceptions which are
not supplies are:
BACKGROUND
The Bank operates a credit card business which requires a
large and constantly fluctuating amount of working capital.
The Bank had entered into a securitisation process which
meant that it could obtain that working capital at a highly
competitive cost. The stream of debts owed by the Bank's
customers (the 'Receivables') were bundled into a form
which, offered as indirect security for commercial paper
issued on the capital markets, gave that paper a higher
credit rating than that of the Bank itself.
For VAT purposes, the Bank's main business is the
making of exempt supplies of credit. Since the Bank makes
other supplies, some of which are taxable rather than
exempt, the Bank is a partially exempt trader.
As a trader, the Bank is entitled to recover, and set
off against tax which it is liable to collect and pay on
its outputs, tax incurred by it in the acquisition of goods
and services in connection with the Bank's business
('input tax').
The attribution of input tax to taxable (including
specified) and exempt supplies may critically depend
upon a correct appreciation of what supplies the Bank
makes in the course of its business. Hence whether the
securitisation process led to supplies being made was
important to the Bank and the tax authorities in their
tax calculations.
The Bank can only recover that part of its input tax
which is attributable to taxable supplies (or to certain
supplies made outside the EU ('specified supplies')).
Where the input tax can be shown to be directly attributable
to taxable or specified supplies, the Bank can recover it in
full. Where the input tax is directly attributable to exempt
supplies, the Bank cannot recover it at all.
The Bank claimed its method of deploying its
customers' debts for the purposes of raising working
-
assignment of debts to a factor to obtain a factoring
service;
-
assignment of property to a lender as security for a
loan; and
-
sale of currency to a foreign exchange dealer to
obtain an exchange service.
Jonathan Lawrence
Kirkpatrick & Lockhart Nicholson Graham LLP
jlawrence@klng.com /
•mvw.klng.com
Butterworths Journal of International Banking and Financial Law - October 2006