Corporate Directors Facing and Tax Liability

Corporate Directors Facing a Tax Debt

Can the granting of an administrative power of attorney determine who is liable for a debt of $254 million?

Comments on the “Supermercados Mayoristas Makro” ruling

By María Soledad González

Serving on a company’s board of directors involves periodically taking part in acts that, within the ordinary dynamics of corporate life, may seem routine: meeting minutes, powers of attorney, authorizations, and delegations so that third parties can carry out various tasks. The recent ruling by the Tax Court of Appeals of the Province of Buenos Aires in “Supermercados Mayoristas Makro” [1] shows that one of those acts can take on unexpected significance when a company’s directors’ personal liability for a tax debt is at stake.

In this case, the granting of an administrative tax power of attorney ended up being the element used to distinguish between directors who were released from liability and others whose obligation to answer jointly and severally with their own assets was upheld. The question the ruling leaves open is whether that element was, on its own, sufficient.

The Substantive Issue

The case originated in an assessment made by ARBA (the Buenos Aires provincial tax authority) under the Gross Income Tax (Ingresos Brutos), for more than $254 million, related to how retail meat sales within the supermarket should be classified for tax purposes. That underlying debate, interesting, but not the focus of this piece, was resolved by the Court in favor of the tax authority.

It is worth noting that, while the Court upheld the assessment, it set aside the omission penalty imposed on the company, finding that an excusable error existed given the novelty and complexity of the issue under discussion.

What is interesting about the ruling is how the Court resolved the extension of joint, several, and unlimited liability for the entire tax debt to the company’s five directors.

Five Directors, One Single Claim

Based on its Tax Code (Articles 21(2), 24, and 63), ARCA extended joint and several liability personally and without limit, for the full amount of the difference claimed from the company, to all five members of Makro’s board, without conducting any individualized analysis of each director’s actual participation in the company’s administration. The sole basis for extending liability to them was having held the position during the periods under assessment.

This was precisely the claim that the Buenos Aires Supreme Court began to dismantle starting in 2021, with the “Toledo” precedent [2] (and, in the same vein, with “Insaurralde” and “Casón”). According to the province’s highest court, the Tax Code’s joint-liability regime operated objectively: it was enough to prove that a person held a position — director, manager, statutory auditor, legal representative — to extend liability for the company’s tax debt to that individual, without requiring the tax authority to prove any specific conduct, and without giving the alleged responsible party a real avenue to show they had no involvement whatsoever in the conduct attributed to the company. The Court found this liability regime unreasonable and declared it unconstitutional.

Although the Supreme Court’s decision was reached by majority vote and on differing grounds, broadly speaking, it can be said that the provincial regime was challenged for dispensing with any assessment of the administrator’s conduct — that is, whether or not they acted diligently, as a prudent businessperson would, as required by Articles 59 and 274 of the Commercial Companies Law. Those articles only allow directors who act with intent or negligence to be held unlimitedly liable, with the burden of proof on whoever invokes that extension of liability. The Court also highlighted the contrast between the Tax Code and Law 11,683 (the national tax procedure law), which allows liability to be avoided by demonstrating diligent conduct and treats liability as subsidiary in nature. Some justices also raised a constitutional objection tied to Article 75(12) of the National Constitution, considering that the Province cannot use local tax rules to alter the liability regime set by substantive (federal) law.

Being on the Board is no Longer Enough

The Tax Court, which as a general rule cannot declare a tax provision unconstitutional on its own, may do so when the Supreme Court has already ruled to that effect (Article 12 of the Tax Code). And that is exactly what it did. Based on the “Toledo” doctrine, it reviewed, one by one, the situation of each of the five directors to whom ARBA had extended liability.

For three of them (Roger Laughlin, Martín Iriarte, and Estevam Demasi Neto), the case file contained no evidence of their direct involvement in the company’s administration in tax matters. They appeared only as board members. That, the Court said, is no longer enough, and it therefore reversed the extension of joint and several liability as to them.

For the other two directors (Pedro José Balestrini Leal and Juan Manuel Zappacosta), by contrast, the file contained something more: both had granted, on the company’s behalf, an administrative tax power of attorney to a third party, who ultimately was the one who actually signed and filed the tax returns for all the periods under assessment. That power of attorney — a formality that probably neither of them would recall as a momentous decision — was precisely what led the Tax Court to find that there had been concrete action on their part in the exercise of their role and, therefore, to conclude that the subjective element required by the Provincial Supreme Court was present. As a result, their joint and several liability was upheld.

Now, then: is granting a power of attorney enough to subjectively attribute the company’s tax non-compliance to a director?

It could be argued that granting a power of attorney amounted to concrete, personal action attributable to directors Balestrini and Zappacosta, distinguishing their situation from that of the directors whose only proven fact was having held the position. Up to that point, the Court’s reasoning appears consistent with the requirement to move away from a purely objective attribution of liability. Even so, it is worth asking whether that action alone is enough to personally attribute the company’s tax non-compliance to them.

The opinions of the various justices in “Toledo,” while not articulating an identical standard, agree in rejecting the idea that liability can follow automatically from the mere status of director, and require some attribution factor tied to the individual’s actual conduct. Some opinions expressly require intent or negligence; others emphasize circumstances that personally connect the responsible party to the non-compliance.

From that standpoint, granting an administrative power of attorney proves who authorized a third party to act on tax matters, but it does not necessarily show why the error contained in the tax returns is personally attributable to those who granted that authority. Between proving a functional act of involvement and demonstrating an attribution factor regarding the non-compliance, there is an additional step that, at the very least, called for more precise reasoning.

The very reversal of the penalty in the case under discussion reinforces this question. The Court found the tax issue at stake sufficiently novel and complex to constitute an excusable error on the company’s part. That does not, by itself, rule out joint and several liability for the tax itself, but it does make it particularly important to explain what specific conduct — intentional or negligent, depending on the standard applied — justifies personally transferring that debt to the directors who granted the power of attorney.

The Court appears to have treated the subjectivity requirement as satisfied merely by proving that the directors took some concrete action. Yet “Toledo” seems to demand something more than simply identifying conduct linked to the company’s administration: that action or omission must make it possible to personally attribute the tax non-compliance to the director. In other words, even where a director is found to have taken some concrete action, it must still be shown why that action justifies personally attributing the company’s tax non-compliance to them.

Conclusion

The Supermercados Mayoristas Makro ruling leaves us with two distinct conclusions. The first now seems settled: in the Province of Buenos Aires, merely holding the position of director is no longer enough, by itself, to automatically extend liability for a company’s tax debt to that director’s personal assets.

The second remains open: how much the tax authority must prove to clear that initial threshold. In the case examined, the Court found it sufficient that the directors had granted an administrative tax power of attorney to the person who later filed the tax returns at issue. The debatable point is not that such an act helps identify a concrete act of involvement, but whether, without more, it can be enough to personally attribute the non-compliance to them.

The inquiry, then, should not end with determining who was involved in some way in tax management. It should also be possible to explain what conduct or omission of that director’s own makes it possible to attribute the company’s tax debt to them. That, probably, is the real boundary still left to be defined after “Toledo.”

 

[1] Tax Court of the Province of Buenos Aires, Chamber I, “Supermercados Mayoristas Makro S.A.,” decision of June 24, 2026.

[2] Supreme Court of Justice of the Province of Buenos Aires, “ARBA v. Toledo, Alejandra and another, re: provincial collection proceeding. Extraordinary appeal for misapplication of law,” judgment of August 30, 2021.