Worldwide transfer pricing reference guide 2014

Venezuela (continued)
Documentation requirements (continued)
The documentation requirements include details on the functions, assets, risks, organizational structure, business descriptions, detailed
information of all operations with related and non-related parties, audited financial statements, agreements and contracts, reasoned
method selection, inventory valuation method (if applicable), analysis results and other relevant information.
Documentation deadlines
The taxpayer must prepare documentation by the filing date of the annual income tax return at the end of every fiscal year. In addition,
the taxpayer must submit the documentation upon request by the SENIAT during a transfer pricing audit. For taxpayers whose fiscal year
ends in December, it is mandatory to file PT–99 during June. In other cases, the filing deadline will be six months after the fiscal year end.
Statute of limitations on transfer pricing assessments
The statute of limitations is four years from the date of filing the return and six years if the taxpayer fails to comply with the filing of any
tax return, including returns for income tax, VAT or customs duties. However, PT–99 is not considered a tax return for penalty purposes.
Return disclosures/related party disclosures
A controlled party’s PT–99 must be filed during the six months immediately following the close of each tax year. The PT–99 form is
available on the tax authority’s website (www.seniat.gob.ve).
Transfer pricing–specific returns
A controlled party’s PT–99 must be filed during the six months, immediately following the close of each tax year. The PT–99 form is
available on the tax authority’s website (mentioned above).
Frequency of tax audit and transfer pricing scrutiny by the tax authority
The SENIAT continues being very active in transfer pricing audits. It has added transfer pricing as a relevant topic to be audited during
general tax audits. Thus far, audits have been conducted on taxpayers irrespective of industry.
Tax audits have been focused both in formal duties (i.e., request of contemporaneous transfer pricing documentation, filing PT–99) and
in the determination of proper taxable income in inter-company transactions (i.e., challenge methodology, comparables, use of multiple
year data, segmented financial data by transaction and/or activity, among others).
The evaluation criteria to trigger a transfer pricing audit are:
• Have inconsistencies between the transfer pricing report, income tax return and the transfer pricing information return
• Use non-updated financial information from comparable companies up to June of the fiscal year subject to the study
• Have profit level indicators below the interquartile arm’s length range
• Show lower operating margins compared with operating margins from prior years or with operating losses
• Late filing of transfer pricing information return
The risk of transfer pricing scrutiny is high when a taxpayer performs financial operations directly or indirectly with related parties and
when taxpayers have technical assistance or know how agreements with related parties abroad.
Currently, in the transfer pricing review process, time frame to submit the information requested, ranges between two to three business
days and there is reluctance in giving extensions.
The likelihood of an annual tax audit in general is high, as is the likelihood that transfer pricing will be reviewed as part of the audit.
However, the likelihood that if transfer pricing is reviewed as part of the audit, the transfer pricing methodology will be challenged, is low.
APA opportunity
Unilateral and bilateral APAs are available to the extent that they are carried out with nations that have concluded double taxation
treaties with Venezuela (refer to Income Tax Law Articles 143 to 167, and Master Tax Code Chapter III, Articles 109 to 111 and Articles
220 to 229).
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