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Organic Tax Code

Decree No. 1,434 of November 17, 2014 was published in Official Gazette Extraordinary No. 6,152 of November 18, 2014.  Through said Decree, the President of the Republic issued the Decree with the Status, Value, and Force of Law of the Organic Tax Code (the “Decree-Law”), which repealed the Organic Tax Code published in Official Gazette No. 37,305 of October 17, 2001.

 

Following are some of the most significant changes included in the Decree-Law:

 

  1. In the area of legal reserve, it was established that the laws that create any taxes may confer on the National Executive the power to modify the tax rate within the limits established by the same.

  2. In the area of electronic domicile, it was established that the Tax Administration may establish a mandatory electronic tax domicile for purposes of the notifications to the taxpayers of the administrative acts or communications required and it will be applied with preference over the domicile of the natural persons, legal persons, and persons domiciled abroad.

  3. In the area of statute of limitations, the period for the Tax Administration to exercise its rights and actions, including the action to demand payment of tax debts and of finally determined monetary penalties, was increased from 4 to 6 years. Likewise, the limitations period was increased from 6 to 10 years in the cases of aggravating circumstances and of actions to impose penalties involving personal restraint.

  4. In the area of penalties for commission of tax violations derived from the failure to comply with formal duties, in general, the shutdown of the establishment for a period between 5 and 10 calendar days and a fine ranging between 5 and 1,000 Tax Units are imposed. In cases of failure to file the informative declaration of investments made in low tax jurisdictions, the fine will be of 2,000 Tax Units and in the case of late filing of the same, of 1,000 Tax Units. Finally, when the violations are committed by taxpayers categorized as special taxpayers, the applicable monetary penalty will be increased by 200%.

  5. In the area of penalties for commission of material tax violations, in general, a fine ranging from 0.05% of the amount owed or tax omitted up to a maximum of 500% is imposed.  In case of obtainment of undue returns or refunds, the fine will range between 100% and 500% of the amounts unduly obtained.

  6. In case of fines for commission of criminal tax violations, the failure to deposit the taxes withheld or received within the periods of time established, the acts tending to provoke or aggravate one’s own or a third party’s insolvency in order to frustrate, in whole or in part, the performance of such obligations, as well the concerted maneuvers or public incitement to organizing the collective refusal to comply with the tax obligations will be penalized with imprisonment ranging between 1 and 6 years.

  7. In the case of proceedings of demand for payment, it was established that on the day following the expiration of the legal or judicial period of time for voluntary compliance, payment of the amounts owed and a 10% surcharge will be demanded from debtor, which payment is to be made within 5 calendar days following debtor’s notification.

  8. It was established that the filing of the Hierarchical Appeal does not suspend the effects of the appealed act.  Notwithstanding the foregoing, the suspension of the effects of the act may be requested from the Tax Administration, when such request is based on a presumption of sufficient legal basis (“fumus bonis iuris”) and on the serious prejudice deriving from the execution of the relevant act. Also, it was established that the suspension of penalties relating to the shutdown of the establishment, confiscation or retention of merchandise, vehicles, apparatuses, containers, tools, instruments of production or raw materials, will not be granted, nor will the penalties relating to the suspension of activities subject to the authorization of the Tax Administration be suspended.  Finally, it was established that the partial suspension of the effects of the administrative act does not prevent the payment of the not suspended portion from being demanded by the Tax Administration.

  9. In the area of enforcement of decisions, it was established that the period of time for voluntary compliance with the decision by the party not favored by the decision in a proceeding will be of 5 calendar days.

  10. The chapter relating to the Executory Proceeding (Juicio Ejecutivo) was removed and a new chapter called Executory Collection (Cobro Ejecutivo) was added, which empowers the Tax Administration to enforce administrative acts without the intervention of the jurisdictional entities.

  11. In the area of Precautionary Measures, it was established that the Tax Administration may adopt precautionary measures without the intervention of a Court, in the cases in which there is a risk for the receipt of taxes, accessory payments, and fines, even if they are in the process of being determined and even if they are not due because of the existence of a term still to elapse. Said precautionary measures may consist in the suspension of the enjoyment of tax incentives granted and of the tax refunds or refunds of payments of a different nature to be made by public entities or bodies in favor of taxpayers, among others.  Finally, the measures adopted may be substituted, at the request of the interested party, by guarantees that, in the judgment of the Tax Administration, are sufficient.

  12. In the area of Tax Arbitration, it was established that the Tax Administration will be in charge of enforcing the Arbitration Award, in accordance with the provisions of the Decree-Law regarding the rules for enforcement of decisions.

  13. It was established that the executory proceedings pending at the Superior Courts for Contentious Administrative Matters as of the date of entry into force of the Decree-Law will be sent to the Tax Administration for their final termination.

 

The Decree-Law will enter into force upon the elapsing of 90 calendar days following its publication in the Official Gazette.

 

In order to access the Decree-Law, please click here.

 

 

“NOTE: THIS INFORMATION SHOULD NOT BE CONSTRUED AS LEGAL ADVICE ON ANY SPECIFIC MATTER AND ITS CONTENT ARE INTENDED AS A MANAGEMENT ALERT AS TO CURRENT DEVELOPMENTS IN VENEZUELA, ANY SPECIFIC LEGAL QUESTIONS REGARDING THE POSSIBLE APPLICATION OF NEW OR PROPOSED LEGISLATION TO PARTICULAR SITUATIONS SHOULD BE ADDRESSED TO TRAVIESO EVANS ARRIA RENGEL & PAZ.