I. Supply Taxes
Under various names (such as the Supply Tax (Tasa de Abasto), Sanitary Protection Contribution, Inspection Fees, or Contribution Affecting Sanitary Protection, among others), a significant number of Argentine municipalities require companies introducing food products into their respective jurisdictions to pay a tax, even when such products have been manufactured and inspected outside the relevant jurisdiction by the competent federal authorities.
Within the tripartite classification of taxes (taxes, fees and contributions) established by the Supreme Court of Justice of Argentina (the “Supreme Court”), for example, in Laboratorios Raffo S.A. v. Municipalidad de Córdoba (Fallos 332:1503, judgment of June 23, 2009), these levies fall within the category of fees.
The distinguishing feature of fees is that their collection presupposes that the State organizes, makes available, and effectively provides the taxpayer with a specific, individualized and divisible service relating to a particular asset or act of such taxpayer.
In this regard, the taxable event underlying the so-called Supply Taxes generally consists of remuneration for the inspection, oversight and sanitary or food-safety control services that the municipality provides (or purports to provide) in connection with food products entering its jurisdiction for consumption or commercialization, particularly when such products have been manufactured, produced or packaged at establishments located outside that jurisdiction. This once again highlights the lack of municipal authority to exercise such powers.
Accordingly, it is worth noting that, although municipal taxing powers are autonomous (pursuant to Articles 5 and 123 of the National Constitution), such autonomy is subject to the limitations imposed by the National Constitution itself. These include federal laws (such as the Federal Tax Revenue Sharing Law No. 23,548, hereinafter the “Federal Tax Sharing Law”) and Articles 75, paragraphs 12 (the so-called “Codes Clause”) and 13 (the Commerce Clause, which prohibits interference with interstate commerce) of the National Constitution. This means that municipalities may not create fees that tax matters subject to federal revenue sharing or encroach upon federal powers (such as control of the national food system), nor may they, in practice, interfere with the free movement of goods.
II. Allocation of Powers in Food Matters
The Argentine Food Code (Law No. 18,284, hereinafter the “AFC”), enacted by Congress pursuant to the powers delegated by the Provinces (under Article 75, paragraph 12 of the National Constitution), together with its implementing regulations (including Decree No. 815/99), establishes the national food-control system and sets forth a clear allocation of powers among the Federal Government, the Provinces and the Municipalities.
The approval and registration of a food product (i.e., its formulation) are the responsibility of the competent national health authority, depending on the type of product: the National Administration of Medicines, Food and Medical Technology (“ANMAT”), through the National Food Institute (“INAL”), for non-meat products, and through its Household Products Service for household-use products; and the National Service for Agri-Food Health and Quality (“SENASA”) for products of animal or plant origin.
Likewise, the control of the industrial plant where food is manufactured, produced or packaged is subject to verification by both the national authority and the provincial authority having jurisdiction over the location of the establishment. Once such authorizations have been granted (which are reflected, among others, in the National Registry of Establishments and the National Registry of Food Products), the product is authorized to circulate, be marketed and sold throughout the national territory.
Control over the federal transportation of such goods (including the vehicles transporting them) also falls within the jurisdiction of the national authorities: INAL for non-meat food products and SENASA for products of animal or plant origin, with no municipal involvement at this stage.
Ultimately, pursuant to Decree No. 815/99 itself, municipal authorities are only empowered to conduct inspections at the point of sale within their municipal jurisdiction. They may not inspect, detain or impose any tax on goods that are in federal transit to another jurisdiction or to local merchants who will subsequently resell them. In this context, municipalities likewise cannot provide any divisible public service in connection with such goods which, as described above, have already been inspected by the Federal Government and the Provinces.
III. The Supply Tax: A Levy Beyond Municipal Authority
As a consequence of the foregoing, the dispute arises when municipal ordinances impose fees that, under the pretext of providing a service for which municipalities lack authority and which has already been provided by other levels of government, tax the mere entry of goods into the municipal jurisdiction (rather than their sale at the point of sale), requiring stamps, sworn statements and payment of the fee as a condition for allowing the vehicles transporting such goods to pass through.
The situation is further aggravated by the fact that non-compliance with such requirement would not be merely a formal matter: depending on the applicable ordinance, in the event of non-payment, the municipality could detain the vehicles on public roads, prevent their entry into the jurisdiction, seize the goods or impose fines, even where the product already has all the national and provincial health authorizations required for its free circulation throughout the country.
Moreover, in practice, municipalities would not provide the service that the fee purports to remunerate, but would merely verify approvals already granted by national and provincial authorities, as though they were an internal customs authority, conduct expressly prohibited by Articles 9, 10 and 11 of the National Constitution.
This overlapping system of controls not only lacks a statutory basis, but also violates the essential requirement applicable to any fee, which requires an effective, specific and individualized service, rather than a mere generic assertion of the “benefits” that entering a local market might provide to a company.
IV. Constitutional Violations
As described above, Supply Taxes are contrary to the National Constitution and the Federal Tax Sharing Law, insofar as they:
– Create an internal customs barrier: Articles 9, 10, 11 and 126 of the National Constitution expressly prohibit the existence of internal customs barriers and transit duties, “regardless of their designation.” In The South American Stores Gath y Chaves v. Province of Buenos Aires S.A. (Fallos 149:137, judgment of August 24, 1927), the Supreme Court held that these provisions seek to ensure that the national territory constitutes a single economic space, preventing any province from hindering trade in products originating in other provinces. Along similar lines, in Bressani, Carlos H. et al. v. Province of Mendoza (Supreme Court, Fallos 178:9, judgment of June 2, 1937), the Court held that this constitutes an essential aspect of the Constitution’s economic program, aimed at building “one country for one people, since there would be no Nation if each province were to conduct itself economically as an independent power.” More recently, in Droguería Kellerhoff SA v. Municipalidad de Santa Rosa Calamuchita – action for a mere declaration of unconstitutionality (Supreme Court, Fallos 344:215, judgment of March 4, 2021), the Court held that payment of the “Veterinary, Food-Safety, Chemical Inspection and Hygienic Control Fee on food and consumer products” (a different name for the Supply Tax) effectively entails the payment of transit duties and, consequently, the creation of an internal customs barrier prohibited by the Constitution.
– Restrict the free movement of goods: The same Articles 9, 10 and 11 of the National Constitution also protect the free economic movement of goods and services throughout the national territory, preventing the movement of goods from one jurisdiction to another from being obstructed in any manner whatsoever (including through taxes or transit duties). The Supreme Court so held in Logística La Serenísima S.A. et al. v. Province of Mendoza – action for a declaration of unconstitutionality (Fallos 335:49, judgment of February 14, 2012), stating that local authorities may not enact rules that obstruct or impair interstate trade. More recently, in Granja Tres Arroyos SACAFEI v. Municipalidad de Río Cuarto – action for a mere declaration of rights (Supreme Court, FCB 034667/2016/CS1, judgment of August 3, 2023), it reaffirmed that taxing the entry of goods through municipal border controls violates such prohibition, stating that “what is abolished and prohibited by the aforementioned clauses is the tax on territorial circulation” and that the passage from one jurisdiction to another “cannot become a taxable event.”
– Encroach upon the exclusive powers of the Federal Government and the Provinces: As explained in Section II above, municipalities, by attempting to exercise food-control powers that federal regulations (the AFC and Decree No. 815/99) reserve to the competent national or provincial authorities, as applicable, exceed their jurisdiction.
– Violate the Federal Tax Sharing Law: Article 9(b) thereof requires municipalities not to impose local levies analogous to shared national taxes, with the sole exception of fees charged in consideration for services actually provided, pursuant to the Supreme Court’s case law, including, among others, Gasnor S.A. v. Municipalidad de La Banda – action for a mere declaration (Fallos 344:2728, judgment of October 7, 2021) and Laboratorios Raffo (cited above). To the extent that a Supply Tax does not remunerate an actual service (as explained in the preceding section), it loses the benefit of such exception and becomes a disguised tax imposed on commerce and the movement of goods, a matter already subject to shared national taxes (such as VAT), thereby violating the prohibition against domestic double taxation that the law seeks to prevent.
– Affect the Progress Clause (Article 75, paragraphs 18 and 19 of the National Constitution): insofar as they interfere with Congress’s authority to regulate matters conducive to the country’s economic development.
V. Federal Courts in San Luis Reaffirm Established Case Law on the Matter
Consistent with the foregoing, on August 11, 2026, the Federal Judiciary of San Luis granted interim relief in favor of a company that was subject to payment of the Supply Tax imposed by the Municipality of San Luis.
Thus, in the proceedings styled Molinos Río de la Plata S.A. v. Municipalidad de la Ciudad de San Luis – Action for a Mere Declaration of Unconstitutionality (FMZ 20842/2026), the Federal Court granted the requested interim relief, finding that, at the level of prima facie showing appropriate to this preliminary stage, both the risk of delay and the likelihood of success on the merits asserted by the plaintiff had been established. The court found that the Contribution Affecting Sanitary Protection (Supply Tax) imposed by the Municipality could be contrary to Articles 9, 10, 11 and 75, paragraph 13 of the National Constitution, insofar as it could constitute an interference with the specialized control agencies established under applicable national food legislation.
In reaching this conclusion, the judge placed particular emphasis on the fact that the AFC establishes, throughout the national territory, the conditions and requirements governing the manufacture, packaging, packing, preservation and transportation of food, with the Federal Government and the Provinces acting as the competent enforcement authorities, but not the municipalities, which are prohibited from exercising any control during the transportation, shipment or distribution of goods. Accordingly, the court found it plausible that the challenged municipal fee was inapplicable to the plaintiff.
The court further held that, absent the granting of interim relief, the initiation of administrative or judicial proceedings aimed at collecting the Supply Tax would adversely affect the company’s assets, thereby establishing the risk of delay required under Article 230 of the National Code of Civil and Commercial Procedure. The Court also referred to its own precedent in Frigorífico Maru S.A. v. Municipalidad de la Ciudad de San Luis – Action for a Mere Declaration of Unconstitutionality (judgment of May 12, 2023, affirmed by the Federal Court of Appeals of Mendoza on September 22, 2023), in which it had already held that the Municipality does not qualify as an enforcement authority under the AFC.
On the basis of these arguments, the Court ordered the Municipality of the City of San Luis to refrain from assessing, claiming, demanding or requiring payment of the Supply Tax, as well as from imposing interim measures, issuing tax-debt notices or otherwise obstructing the entry and transportation of the plaintiff’s products, until a final judgment is rendered in the proceedings.
VI. Conclusion
The judicial precedents reviewed above show that the Federal Judiciary continues to reaffirm a clear approach: municipalities lack the authority to regulate or control the national food system (a power reserved to the Federal Government and the Provinces, as applicable), or to supervise the federal transit of goods. Accordingly, they may not impose taxes on controls that are constitutionally beyond their powers and that, in practice, they do not actually provide, beyond the sole area falling within their jurisdiction: the point of sale within their own municipal boundaries.
For companies that continue to be subjected to these unconstitutional practices throughout the country, the precedents referred to herein provide strong and well-established legal grounds to challenge Supply Taxes and any municipal act or conduct that interferes with the free movement of their goods.