BUENOS AIRES, Nov 3 (Reuters) - Argentina’s tax authority said it started meetings on Monday with Proctor & Gamble Co after accusing the world’s No. 1 household products maker of tax fraud, as the South American nation continues to ramp up interventions in the economy.
On Sunday, Argentina accused the company of hiding income and over-billing $138 million in imports to get money out of the country, which three years ago introduced stringent capital controls in order to protect its fast-dwindling foreign reserves.
P&G, which earlier this year came under the scrutiny of Mexican authorities for alleged tax avoidance, said on Monday it had paid all the taxes owed but was “working to more fully understand the concerns and to constructively resolve them.”
“When the process of reunions that started this afternoon has concluded there will be an official press release,” a spokesman for the Argentine AFIP tax authority said.
AFIP said at the weekend it had suspended P&G’s operations in Argentina, retracting its right to export and import.
Cincinnati-based P&G, the maker of Gillette razors and Tide detergent, runs three manufacturing plants and two distribution centers in Argentina.
The company said on Monday its Argentine operations contributed about 1 percent to its overall sales. P&G reported net sales of $83.1 billion in 2014.
Argentina’s leftist government has been stepping up state intervention in the economy in an attempt to prevent its latest debt default from triggering a balance of payments crisis.
The country has been banished from the international capital markets since its 2002 default on about $100 billion in bonds, compounded by its fresh default on restructured bonds in July.
The government is restraining access to foreign currency in a bid to retain central bank reserves, which have fallen 17 percent over the last 12 months to about $28 billion. (Reporting by Sarah Marsh and Jorge Otaola; Additional reporting by Nandita Bose; Editing by Lisa Shumaker)