Worldwide transfer pricing reference guide 2014

Venezuela
Taxing authority and tax law
Taxing authority: Venezuelan Tax Administration (National Integrated Service of the Customs and Tax Administration — SENIAT).
Tax law:
• 2001 Master Tax Code, Chapter III, Articles 109 to 111, and 220 to 229
• 2001 Venezuelan Income Tax Law, Chapter III, Articles 111 to 170
• 2007 Income Tax Law Reform, Article 118 — inclusion of thin capitalization rules
Relevant regulations and rulings
Administrative Order N°SNAT/2010/0090, issued by the SENIAT, was published in the Official Gazette N°39,557 of 20 December 2010.
It establishes the procedure for the calculation and use of the arm’s length range for transfer pricing purposes. The main considerations
are as follows:
• The use of the interquartile range as the arm’s length range
• In case the price or amount or profit margin is within the interquartile range (arm’s length range), the tax administration will deem it as
agreed by independent parties. If, however, it is not within the interquartile range, the taxpayer must take the median of the range as the
arm’s length price
In February 2007, a partial reform of the Income Tax Law and rules on thin capitalization were published in the Official Gazette
No.38.628. The thin capitalization rules apply, as of fiscal year 2008, to Venezuelan taxpayers or Venezuelan permanent establishments
holding debt (controlled debt) of companies or individuals who are considered related according to Title VII, Chapter III of the transfer
pricing rules. The main inclusions are as follows:
• Taxpayers will have limited possibility to deduct interest expenses resulting from related parties’ loans, when the average amount of debt
(with related and unrelated parties) exceeds the average amount of equity for the respective fiscal year
• The amount by which the debt exceeds the taxpayer’s equity will be treated as equity for income tax purposes
OECD guidelines treatment
The 2010 OECD Guidelines are applicable as a supplement to Venezuelan laws for the topics that are not covered in there.
Priorities/pricing methods
The acceptable methods are the OECD methods: CUP, Resale Price, Cost Plus, Profit Split and TNMM. In Venezuela, the CUP method
takes priority over others.
Transfer pricing penalties
When failing to apply the transfer pricing methods prescribed by law, the taxpayer faces fines ranging from 300 to 500 tax units. 1 In
addition; there is a fine ranging from 25% to 200% of the omitted tax amount. If there is a transfer pricing assessment, late payment
interest may also be added to these amounts. A failure to file the transfer pricing information return (PT–99) will trigger a penalty of 10
to 50 tax units.
Penalty relief
If a taxpayer applies a legally sanctioned transfer pricing method, this could be considered as a mitigating circumstance in the
determination of an assessment. This penalty relief is based on previous tax audit procedures and assessments, but there is no legal
provision supporting it.
Documentation requirements
Effective since 2002, taxpayers are required to prepare and maintain extensive supporting and contemporaneous documentation.
1 2013 Tax Unit = BSF107/unit.
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