| Tax Authority:
National Integrated Tax and Customs Service Administration (Servicio Integrado de Administración Aduanera y Tributaria – SENIAT)
| Statutory Law / Regulations / Guidelines:
The transfer pricing rules applicable in Venezuela are outlined in the 2001 Master Tax Code: Chapter III, Articles 109 to 111, and 220 to 229; 2001 Venezuelan Income Tax Law, Chapter III, Articles 112 to 170; 2007 Income Tax Law Reform, Article 118 – inclusion of thin capitalization rules.
| Scope of Transfer Pricing Regulations:
Related parties are defined as parties that are directly or indirectly managed, controlled, or owned by the same party or group of parties; intermediary agents; and any relationship between a Venezuelan taxpayer and entities located in low-tax jurisdictions (i.e. a country included in the list of tax havens). The arm’s-length standard applies to all related-party transactions.
| Reference to OECD Guidelines:
Venezuela is not a member of the OECD. However, the Venezuelan tax authorities have adopted the arm’s-length standard and the use of the methods endorsed by the OECD Guidelines.
| Methods & Comparables:
Venezuela accepts the five methods specified in the OECD Guidelines. The most appropriate method rule applies, with preference for the comparable uncontrolled price method. Foreign comparables are accepted when local comparables are not available.
| Documentation Requirements:
Transactions and arrangements with foreign related parties must be disclosed to the tax authorities through an informative transfer pricing return, which must be filed within six months following the end of the fiscal year. This informative transfer pricing return must illustrate the types of intercompany transactions, transaction dates, transaction amounts, the transfer pricing methods applied, and the result of each transaction (i.e. profit or loss). Further appendices require the taxpayer to disclose a related and unrelated party segmentation of the profit and loss statement. Moreover, the taxpayer must develop and maintain a transfer pricing study to document the analyses of its intercompany transactions. The Venezuelan rules also require contemporaneous transfer pricing documentation.
| Audit Risk:
The risk of transfer pricing being examined as part of a tax audit is high. If the SENIAT challenges transfer prices during an audit, the taxpayer may either accept the objection and settle with the Tax Administration or start summary proceedings to defend its position.
| Transfer Pricing Adjustments:
The statute of limitations is four years from the date of filing the return and six years if the taxpayer does not comply with the filing of any tax return, such as an income tax return, VAT returns, or customs duties returns.
| Interest & Penalties:
Three types of penalties may be imposed:
(i) Various noncompliance issues relating to filing and documentation requirements;
(ii) Omission by the taxpayer that leads to the illegitimate reduction of taxable income, which can result in penalties ranging from 25 to 200 percent of the tax omitted; and
(iii) Fraud on the part of the taxpayer, which may result in a jail sentence.
| Advanced Pricing Agreements:
Unilateral and bilateral APAs are available.
| Competent Authority:
There is no formal procedure.
| Link to OECD Country Profile
| Link to Relevant Government Sites |
National Integrated Tax and Customs Service Administration