August 08, 2004 | By Keith Martin in Washington, DC

ARGENTINA is moving to encourage a domestic ethanol industry.

A bill introduced by 50 senators and supported by the vice president would provide tax breaks to companies that produce biofuels, defined as blends of vegetable oil or alcohol with gasoline or diesel fuel. Argentina is the secondlargest exporter of corn after the United States. 

Corn is used as a feedstock for making ethanol. In another development, the Argentine government announced at the end of May that it intends to impose a 20% tax on natural gas exports, and to increase existing export taxes on oil from 20 to 25% and on LNG, or liquefied natural gas, from 5 to 20%.

Separately, a recent decision by the federal Supreme Court involving several major oil companies shows how to avoid stamp taxes. Such taxes must ordinarily be paid on written contracts. They are collected by provincial governments. Verbal agreements are not subject to tax. An oil company made a written
offer to buy a certain amount of oil. No further writings were exchanged. Rather, the seller acknowledged receipt of the offer and then accepted it simply by delivering the oil.

The Supreme Court said the province was barred from collecting stamp tax because the acceptance was not in written form. The case is Shell Petroleum Company Argentina S.A. (Neuquén Province). The case was decided in April.