(Adds company comment, background on company operations in
By Hugh Bronstein and Nandita Bose
Nov 2 Argentina has accused Procter & Gamble
, the world's No. 1 household products maker, of tax fraud
and said it suspended its operations in the South American
country, according to a statement issued on Sunday by the
country's AFIP tax authority.
It was unclear what the government meant by suspended, and
the company declined to comment on whether its operations had
Argentina accused the company of over-billing $138 million
in imports to get money out of the country, according to the
statement, which was published on Argentina's presidential
"P&G funneled currency abroad and hid income that was
subject to tax in Argentina," it said.
"We have to put an end to these tricks used by international
companies," the statement added.
Procter & Gamble spokesman Paul Fox said the company is
working to understand fully the allegations and resolve them.
"We don't pursue aggressive tax/fiscal planning practices as
they simply don't produce sustainable results," he said adding
the consumer products maker values its relationship with the
country and its consumers.
Procter & Gamble has been operating in Argentina since 1991
and currently runs three manufacturing plants and two
In 2006, Cincinnati-based P&G bowed to pressure from the
Argentinian government and froze prices of 31 products including
shampoos, soaps and cream for at least a year in an effort to
help the government combat inflation.
The company, which does not break down revenue by country
but does so by region, said in its 2014 annual report that Latin
America contributed 10 percent to overall company revenue. P&G
reported net sales of $83.1 billion in 2014.
Argentina has restrained 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.
The country has been banished from the international capital
markets since its 2002 default on about $100 billion in bonds,
compounded by another sovereign default in July.
(Additional reporting by Jorge Otaola in Buenos Aires and
Michelle Conlin in New York; Editing by Eric Walsh and Cynthia