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EXCLUSION IN EQUITY ACCOUNTS RECEIVABLE FROM RELATED COMPANIES, ACCORDING TO THE ISLR. Features

As required under Title IX of the Income Tax Act, all taxpayers who made commercial, industrial, banking, financial, insurance (...) which are required to keep books, should benefit from the system of inflation adjustment. Now, in reference to this scheme I note that under the provisions of Article 184, second paragraph "should be excluded from the assets and liabilities and net assets, accounts and notes receivable from shareholders, directors, affiliates, subsidiaries and other companies related or connected in accordance with the provisions of Article 116 of this Act. " This decreases the amount of equity and consequentially increase the Income Tax to pay. Certainly

exclusion is intended to prevent transfers funds to related companies which have the potentiality to maintain high fictitious capital, so as not to affect the calculation of the adjustment for inflation of assets. That is, the rule seeks to prevent under the guise of loans are ahead dividends to shareholders or related companies distribute profits. Notably, the distribution of dividends or profits are considered an asset to decrease the effects of adjusting for inflation.

fraud Note that the purpose of the provision is not at all objectionable. However, the subject of the dispute was that in many cases the accounts receivable from related companies originated in legitimate trade or lending in free market conditions. Ie that the discussion was not limited exclusively to a practice of interpretation of article LISLR, but a trial involving the validity and application of guiding principles for taxation, such as the principle of substance over form, economic reality and Freedom of evidence.

According to the doctrine, there is no justification for the exclusion of accounts receivable of a commercial nature, from sales or services performed in the ordinary course of business of the taxpayer money, and whose product was intended for production taxable income of the company. Moreover, in the case of non-trade receivables, the exclusion may be ineffective if the loan for a related company was subject to market conditions, ie, the amounts were subject to restitution and earn interest. So the administration should give priority to economic reality of the operation as a function implementations of the standard.

But to the decision of the Administrative Policy Board where Union Securities, abandons the grammatical interpretation of the law and refers to the principle of economic reality as a tool to determine the existence of serious situations. Notes the decision to exclude only the initial equity accounts receivable that does not really arise under normal operations and necessary for the production of taxable income. Add

the Board that the presumption contained in the rule can be rebutted by proof to the contrary, so that the taxpayer can demonstrate that the operations that led to the accounts and notes receivable are directly linked to the process production of income, for any claims or liabilities operation with an affiliate that is related to the normal conduct of business of the taxpayer represents a game that ultimately integrates equity. Undoubtedly, an important precedent that should guide the activity applied and interpreted in tax regulations.

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Value Added Tax

features Value Added Tax (VAT) are many and require extensive exposure, but we will try to clarify some of what we consider most important.

With regard to the characteristics of the consumption tax rate added value, the Venezuelan tax design does not differ in their nuances of use in the rest of the fiscal sovereignty, because it retains and recognizes its principles and characteristics relevant, among which we mention:

i. is a general tax: is a general tax, because taxes all transfers or deliveries of goods and services, imports and exports final property and services, which are not expressly declared exempt or not subject, or have not benefited by the payment of the tax exemption granted by the National Executive in accordance with relevant tax law (exempt).

ii. is an indirect tax: Those tax where the law allows to transfer the tax burden and where wealth is measured indirectly, ie through spending or consumption have been classified by doctrine and indirect taxes, therefore, not only as a charge VAT is levied on income indirectly through consumption, regardless of ability to pay, but because the tax burden is passed on to final consumers to be passed in the supply chain of goods and services subject to the tax, it still has the characteristic of being indirect. It is noteworthy that this feature allows taxpayers highlighted as ordinary taxpayers (taxpayers' rights), we in turn requires the shifting of the tax burden to sign tax (economic or taxpayers who ultimately support the tax burden, which is the final consumer), so for example, Venezuelan law defines ordinary taxpayers in Article 5, who are regular importers of goods, manufacturers, traders, service providers usual and in general, any natural person or legal entity as part of their business, subject or occupation, do the activities, legal businesses or transactions which constitute taxable events imposed by the Act These subjects are those who are obliged to transfer the tax burden to the subject de facto (end user) who is forced to bear the tax and the imposition whom it is addressed, but the mechanics and then the characteristic of indirect tax, the so-called taxpayers of law (ordinary taxpayers) are forced to pass the tax burden and are the ones who respond to the subject of the amount thereof.

iii. tax is a real and objective: virtue which is based on a target budget whose intrinsic nature is determined irrespective of the personal element of the customs relationship, ie, the obligation arises regardless of who is the subject acquiring the goods and services taxes. This feature persists, despite the fact that there are some considerations Act no restraints (services provided by financial institutions, insurance companies, subject to special laws) or waivers of such subjective.

iv. is regressive: Because as in most of the sales tax, this levy does not take into consideration the immediate ability to pay or taxable enrichments final consumer, because the rate at which obeys is the consumption of goods and services. In this sense, wealth is analyzed from the perspective of expenditure or consumption.

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The Philosophy of Value Added Tax

Today's topic I bring it up, because to determine the effects of waivers certain tax payment and certain goods and services tax structure and other cases, it is necessary to understand the philosophy, characteristics and scope of Value Added Tax (VAT) and know the economic cycle of production of goods and services.

In any market economy produces a wide range of goods and services to meet the consumption needs of the population. Goods and services as products of economic activity in general can be classified into two types: i) as intermediate goods, if those who have acquired to resell or process to deliver a new product or service, ii) final products , if the user takes the latter with the intent to use or consume.

Obtaining a final product, usually involves several steps, as the processes of importation, production and distribution, including in all these stages, the services required by importers, traders and final consumers.

At each stage of the process, adds value to the product or service in this regard, the economic cycle, the value added is the value of the product obtained in each stage, the less the cost of intermediate products of earlier stages and that is where exactly lies the philosophy of the tax rate added; tax at each stage of value added to the final consumer, in order that the tax falls on it, so at each stage to determine the amount of tax due by VAT taxpayers of law is performed on the financial basis of the removal of tax collected on sales or services as input tax on import, procurement of goods and services, known the determination of "tax against tax."

consumer indirect levies such as VAT, offer more benefits to the tax authorities in their application because, once introduced into the system and overcome the barriers of incorporation, as occurred in countries of America, found little resistance for payment by consumers, and since the control and recovery rests with the suppliers of goods and services, and how easy it is its audit and collection, unlike taxes levied on income. That is why VAT is the highest-grossing tribute today in many countries.

The VAT tax is more general and less impact on economics, for producers, importers and intermediaries in indirect tax rates, since it is present in all stages of economic activity, from the import, production and extends to all consumers within the territory of each State, along with the neutrality that represents the cumulative non-tax, importers, producers and intermediaries discharge input tax in procurement of goods and services.

However, this tax has an impact on all citizens, even if they are released from other duties, although they have no ability to pay regardless of their status, including within public entities and as well as the private sector, also to foundations and nonprofit associations, for the procurement of goods and services taxes.

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ORIGIN OF VALUE ADDED TAX DIVIDENDS

Abroad, speaking of ancient history in Egypt, Greece and Rome. It mentions the hundredth venalium rerum, applied to Rome by Augustus. In France during the Middle Ages ruled a similar tribute, called " Maltot " which was forerunner of the "sales tax" English, implemented by Alfonso XI in 1342.

During the First World War began to meet and expand the sales tax. First settled in Germany and then went to France to continue its expansion in other European countries.

The Value Added Tax (VAT) has its origin in the Treaty of Rome European Economic Community. When establishing the need for the creation of the Common Market, it was necessary that a system of taxation between those six countries that took the kickoff of this market, enabling the free movement of goods. Ie that the goods are transferred from one country to another without the distortions that cause the problems of customs tax.

For this reason, establishing in 1962, a Expert Committee consisting of the six countries that formed the Common Market (France, Holland, Belgium, Luxembourg, Italy and Germany), five years later (1967), produced what became known as Newmark Report, point reference for all who study the issue of VAT. Today, the VAT tax is one of the star, if you want to call it. It is the taxes that support those who consider themselves modern and latest fashions in tax matters.

Only three years later, the VAT came to America, and so countries: Colombia, Ecuador, Bolivia, Chile, Mexico, Peru, Brazil, Argentina and Uruguay, sanctioned by their respective laws, all within the decade of the seventies (1970).

Venezuela on the other hand, in 1989 enters a process of tax reform. commitments acquired in 1992 with the World Bank and the Inter-American Development Bank. projects arise Collection Improvement and Modernization and strengthening of customs supported by a new tax design that attempts to transform the tax, leading to VAT, implemented according to GO on 24/09/1993 33,304 under the government Ramon J. Velásquez, formed with purpose of completing the constitutional period 1989-1994, who was appointed President of the Republic by electing members of the former National Congress, which in turn at the request of the former Supreme Court suspended the President Pérez, elected by universal suffrage , direct and secret of his second term on 20/05/1993 to be submitted to a judicial process.

Subsequently, 27/05/1994 and under the leadership of Dr. Rafael Caldera, this tax became "tax on luxury goods and wholesale" ICSVM; 05/05/1999 Until again resume the name of VAT, this time under the government of President Chavez, with subsequent reforms led to the current law under Decree with Force of Law No. 5212 dated 26/02/2007.

tribute is both the star, which only in 2010, according to the SENIAT, VAT accounted for the amount of Bs 45.6 billion, the total of 102 billion Bolivars collected.