A glance on the trends in transfer pricing in Venezuela. For more information, please contact us at: www.nlc-asesoria.com

1. Venezuela: Trends in Transfer Pricing
Transfer Pricing
► Nelson Landaeta C.
nelson.landaeta@nlc-asesoria.com
www.nlc-asesoria.com

2. 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 a
Transfer Pricing audit process
 Recommendations to be prepared for an audit
process

3. Recent developments on transfer pricing
in Venezuela

4. Recent developments on transfer pricing in Venezuela
 Seniat has issued several TP  During the past six years, the
assessments to relevant multinational transfer pricing personnel from
corporations in diverse industries, SENIAT has being participating in
which have been publicly informed: joint training sessions with other
 Automotive: Mitsubishi Motors, tax authorities in Mexico and
Mack, Chrysler; GM Europe.
 Oil Industry: Shell Venezuela,  Adoption of the updated OECD
Exxon Mobil, Eni transfer pricing guidelines
 Pharmaceutical: Pfizer Venezuela, approved on July 2010.
 Food Industry: Alimentos Heinz  More aggressive presence of tax
authority in transfer pricing
auditing process
 Inclusion of thin capitalization rules
during 2007 VITL amendment;

5. Issues considered by the SENIAT to start
an audit process on transfer pricing

6. Issues considered by the SENIAT to start an audit
process on transfer pricing
 Taxpayers with costly debts and interests  Rejection of the use of foreign Global
from long term loans effected with their Master File TP documentation;
respective related foreign party  Using non updated financial information
from comparable companies up to June
 Changes in TP methods without adequate of the FY subject to study;
justification from one year to another year;  Inconsistency between TP report, Income
Tax Return and PT-99 Form;
 Profit Level Indicators (PLI) below the first  Showing lower operating margins
inter quartile arm’s length range; comparing with operating margins from
previous year.
 Significant payments to related parties for  Late filing of PT-99 Form.
intra group services and technical assistance;
 Linked cooperation among all the Main
Customs Tax Administration and the TP
Administration;

7. Basic aspects considered by SENIAT
during a Transfer Pricing audit process

8. Basic aspects considered by SENIAT during a Transfer
Pricing audit process
 Review of compliance with the  Analysis of financial information
requirements set under Article 169 of used: (Historical / re expressed)
the VITL, the transfer pricing study (aggregated / segmented);
and all supporting documentation for
 Selection criteria for external
each transaction subject to analysis;
comparable (TNM)
 Contemporaneity of the comparable
 Review of economical analysis set run process
aspects such as:
 Review of the acceptance and
 Internal comparable rejection;
rejection matrix contained in the
 CUP method discard; study;
 Discarding other methods;
 Characterization of the entity based on
their functions, assets and risks (TNM
Analysis);

9. Recommendations to be prepared for an
audit process

10. 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.

11. Thanks for your attention !
► Nelson Landaeta C.
nelson.landaeta@nlc-asesoria.com
www.nlc-asesoria.com