Argentina's Molinos Suspended From Key Grain Export Registry

An Argentine crack-down on what it says is chronic tax evasion among the country's leading grain exporters widened Wednesday, with exporter and food processor Molinos Rio de La Plata S.A. (MOLI.BA) added to the list of companies excluded from a key grain trade registry.

Molinos, which posted a profit of ARS376 million ($94 million) in 2010, stands accused of using a shell company set up in Chile to avoid income taxes of at least ARS143 million from 2004 to the present, said a source involved in the investigation on condition of anonymity.

Exclusion from the registry will cause the income tax withheld on domestic grain trades to rise from 2% to 15% and the withholding of a 10.5% sales tax. The affected firms will also face new, burdensome approval requirements imposed for needed domestic shipping permits.

The federal tax agency, Afip, has already suspended Louis Dreyfus, Bunge Argentina, Oleaginosa Moreno, Cargill Inc., Archer Daniels Midland Corp. (ADM) and Toepfer International GmbHp from the registry for allegedly evading taxes by triangulating their grain trading operations through other countries, among other measures.

The companies have denied wrongdoing and complain that they are being singled out by Afip.

A representative from Molinos did not immediately respond to an email seeking comment.

The government of President Cristina Fernandez has turned up the heat on grain exporters, who the administration says have evaded hundreds of millions of dollars in taxes in recent years.

Last year, Afip accused four of the country's 10 largest grain exporters of using shell companies in neighboring Uruguay for accounting purposes that left minimal profits on the books of their Argentine units.

At the time, Bunge issued a blunt statement saying the government had pressured the grain exporters to make advanced income tax payments for 2011 or face "serious problems for the companies and their directors."

Agriculture exports were largely responsible for Argentina's $12.06 billion trade surplus last year, while taxes on farm exports accounted for a significant percentage of the federal government's tax revenue. Argentina is the world leader in soymeal and soyoil exports, ranks No. 2 in corn exports, and third in soybeans.

Cargill Inc. is the leading exporter of grains in Argentina by volume, followed by Bunge Ltd. (BG), Archer Daniels Midland Corp., Louis Dreyfus Commodities, Nidera Handelscompagnie B.V., Toepfer International, the Argentine Cooperative Association, Noble Group Ltd. (N21.SG), Aceitera General Deheza SA and Oleaginosa Moreno SA.

-By Shane Romig, Dow Jones Newswires; +541141036738; shane.romig@dowjones.com

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