Trends on Transfer Pricing in Venezuela

8/7/2019 Trends on Transfer Pricing in Venezuela

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Venezuela: Trends in Transfer PricingTransfer Pricing Division

Nelson Landaeta [email protected]


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Agenda

Recent developments on transfer pricing in

Venezuela

Issues considered by the SENIAT to start an audit

process on transfer pricing

Basic aspects considered by SENIAT during aTransfer Pricing audit process

Recommendations to be prepared for an audit

process


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Recent developments on transfer pricing

in Venezuela


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Recent developments on transfer pricing in Venezuela

Seniat has issued several TP

assessments to relevant multinational

corporations in diverse industries,

which have been publicly informed:

Automotive: Mitsubishi Motors,

Mack, Chrysler; GM Oil Industry: Shell Venezuela,

Exxon Mobil, Eni

Pharmaceutical: Pfizer Venezuela,

Food Industry: Alimentos Heinz

Inclusion of thin capitalization rules

during 2007 VITL amendment;

During the past six years, the

transfer pricing personnel from

SENIAT has being participating in

joint training sessions with other

tax authorities in Mexico and

Europe.

Adoption of the updated OECD

transfer pricing guidelines

approved on July 2010.

More aggressive presence of tax

authority in transfer pricing

auditing process


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Issues considered by the SENIAT to start

an audit process on transfer pricing


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Issues considered by the SENIAT to start an auditprocess on transfer pricing

Taxpayers with costly debts and interests

from long term loans effected with their

respective related foreign party

Changes in TP methods without adequate

justification from one year to another year;

Profit Level Indicators (PLI) below the first

inter quartile arms length range;

Significant payments to related parties for

intra group services and technical assistance;

Linked cooperation among all the Main

Customs Tax Administration and the TPAdministration;

Rejection of the use of foreign Global

Master File TP documentation;

Using non updated financial information

from comparable companies up to June

of the FY subject to study;

Inconsistency between TP report, Income

Tax Return and PT-99 Form; Showing lower operating margins

comparing with operating margins from

previous year.

Late filing of PT-99 Form.


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Basic aspects considered by SENIAT

during a Transfer Pricing audit process


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Basic aspects considered by SENIAT during a Transfer

Pricing audit process

Review of compliance with the

requirements set underArticle 169 of

the VITL, the transfer pricing study

and all supporting documentation for

each transaction subject to analysis;

Review of economical analysisaspects such as:

Internal comparable rejection;

CUP method discard;

Discarding other methods;

Characterization of the entity based on

their functions, assets and risks (TNM

Analysis);

Analysis of financial information

used: (Historical / re expressed)

(aggregated / segmented);

Selection criteria for external

comparable (TNM)

Contemporaneity of the comparable

set run process Review of the acceptance and

rejection matrix contained in the

study;


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Recommendations to be prepared for an

audit process


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Recommendations to be prepared for an audit process

Carry out regular meetings between the Finance area and / or tax, operations

and marketing areas in order to handle details on its operational aspects and

its relationship to transfer pricing issues that could arise from them;

Identify potential service providers (prove non-availability of services locally)

in the case of payments for technical assistance;

Make sure to have all the supporting documentation evidencing the reception

of services from a foreign related party;

Supporting documentation language: Spanish

Establishment of procedures through which the supporting information is

properly filed prior to the start of an audit process.


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Thanks for your attention !

Nelson Landaeta [email protected]

Documents

Trends on Transfer Pricing in Venezuela