In the last three decades, the Venezuelan Tax System has undergone a series of momentous changes that force the Venezuelan Manager to rethink the old approach to Venezuelan tax management characterized many times by the effectism of managerial decisions, improvisation and on other occasions, by simple chance.
Changes such as the incorporation of the Inflation Adjustment in terms of Income Tax (ISLR) in the Law of the year '91, the implementation of the Value Added Tax (VAT) in the year '93, the creation of the National Integrated Administration Service Tax (Seniat) in the year ´94, the transitory validity of taxes such as the Business Asset Tax (IAE) and the Bank Debit Tax (IDB), the incorporation of world income regimes, dividend tax, fiscal transparency international and transfer prices in the reform of the ISLR law of the year ´99, the activation of the so-called Zero Evasion Plan as of 2003 or the application of the tax content of the Organic Law of Science, Technology and Innovation (LOCTI),these are just some examples of these changes that definitely require a more planned, organized and controlled management by the manager of the Venezuelan company.
More recently, at the end of 2014, reforms to several tax laws were enacted, among which, it is worth highlighting, the reforms to the Income Tax Law, the Value Added Tax Law and the Organic Tax Code, which stipulate regimes stricter controls, more severe penalties for taxpayers.
The reality presented forces us to focus on the tax issue of the organization under management parameters, structured and systematic, which consider the essential principles of an effective Tax Management.
Now, to determine the objectives and scope of the Tax Management model that is intended to be outlined in these lines, it is necessary, as a preliminary point, to circumscribe the meaning of the concepts that make up the term "Tax Management", that is, by a conceptualize "Management" and on the other "Tribute" for the purposes of the proposed Management model.
Management, in general, has been defined in many ways, depending on the predominant managerial tendency at each historical moment. Under the context of this article, Management (in general terms) can be understood as the set of techniques to work with human capital, material and financial resources, effectively (effectively and efficiently), in order to achieve the achievement of an organization's strategy.
From the previous precept it is important to highlight the fundamental objective that all Management must pursue, -to achieve the organization's strategy-. In the particular case of companies with economic purposes, whether they are civil or commercial, the business strategy must undoubtedly contain the generation of added value to its partners or shareholders, of course, always complying with regulatory regulations and with their obligations with the country, with the workers and with the community.
On the other hand, under the context of the proposed Tax Management model, when referring to the term “Tribute”, both those that traditionally contain the tripartite classification of the most experienced doctrine on the subject, taxes, fees and contributions, as well as to a new kind of tax that has been establishing in the country which could be called, tax levies, and among which can be classified the tax provided in the Organic Law of Science, Technology and Innovation (LOCTI) and the one provided in the Organic Law against Illicit Traffic and Consumption of Narcotic and Psychotropic Substances (LOCTISEP), among others.
Having specified the above, the Tax Management model can be defined as the set of techniques that allow identifying, analyzing and evaluating the tax risks inherent to the business and its operations in order to guarantee the proper valuation of the same and, in turn, encourages conceive, organize, direct and control strategies aimed at tax optimization that reconcile the organization's strategy with the tax powers of the different active subjects with interference over it. In short, Tax Management consists of managing risks and opportunities.
As can be seen from the previous concept, the Tax Management model is based on two fundamental pillars, on the one hand, the management of the tax risk inherent to the business and its operations, and on the other, the tax optimization or rationalization of the tax burden. of the organization always with strict adherence to the rules that apply.
That is why a few brief lines are devoted to each of these fundamental pillars of the tax management model below:
I. Tax Risk Management:
In the first place, "tax risk" can be understood as the threat that an event of a tax nature could adversely affect the organization in the effective (and efficient) fulfillment of its business strategy.
In order to manage the tax risks of an organization, they must first be identified, with the purpose of compiling an inventory of tax risks classified according to their impact on compliance with the organization's strategy. This process is achieved by regularly conducting internal and external audits of substance and form, primary or follow-up, technically and attitudinally preparing personnel from all areas of the business to maintain a critical behavior in the face of tax reality, involving the internal tax specialist and / or or external in the configuration of unusual operations carried out by the organization, bringing the fiscal function closer to the operation and promoting formal and informal communication between the different functional areas of the organization.
Second, risks must be analyzed by classifying them according to their type and quantifying their impact on the organization, evaluating the contingency based on its probability of occurrence (frequency) and impact (intensity), determining the measures aimed at mitigating or eliminating the contingency. raised and finally assessing the cost of said measures.
In this sense, the types of tax risks most present in the reality of the Venezuelan company are the following:
- Transactional Risks: Are all those contingencies related to non-recurring operations carried out by the organization, such as: mergers, purchases of goodwill, equity restructuring, financing, large investments, etc. Operational risks: In this category are the risks associated with the normal operations of the business, those that represent the reason for its existence Compliance risks: These are associated with the formal and material duties provided by tax regulations and can be of a very varied nature, starting with compliance related to the declarations and payments of the different taxes, keep the required books in a proper and timely manner, register in the pertinent records,issue the different documents for the operations with tax incidence, comply with the resolutions, orders and orders issued by the Tax Administration, among others Accounting / Financial Risks: These risks are generally associated with the improper registration of tax operations, including the Incorrect valuation of the provisions for tax expense or fiscal contingencies that may affect the results reflected in the financial statements (Balance Sheet, Income Statement, Cash Flow, Statement of Movement of Equity Accounts, etc.) Reputation Risks: Last but not least, the Tax Manager must analyze and assess the risk that knowledge implies by clients, suppliers, investors and the community in general,of tax matters that could eventually be aired in the different instances due to inspection or verification procedures carried out by the different Tax Administrations with interference on the organization.
Finally, once the tax risks have been identified and analyzed, the process of evaluating them begins, which consists of a deliberate process to decide between eliminating, mitigating or accepting the contingency, based on the level of risk that is arranged or prepared, to run the organization and the assessment of the measure aimed at mitigating or eliminating the contingency.
II. Tax Optimization:
The second pillar that supports the proposed Tax Management model consists of tax optimization, understood as the act or sets of acts aimed at rationalizing the tax burden of a taxpayer and / or optimizing the use of their financial resources, always with strict Adherence to current legal regulations and with the sole objective of harmonizing the organization's business strategy with its duty to contribute to public spending.
Tax optimization, tax planning or tax planning, as it is incorrectly called at times, is a process that must fundamentally follow the steps of the administrative process, namely planning, organization, direction and control.
The planning process itself is a creative and circumstantial process in which a strategy is conceived whose objective is oriented to the optimization of the fiscal or financial cost of a particular transaction or of the operation of the business or part of it.
The organizational process, within the framework of tax optimization, consists of compiling the elements and resources necessary to execute what is planned, which is extremely important since the conception of the strategy alone is not enough, but its implementation must be feasible in the period of time foreseen to execute it.
Executing what is planned is a function that must be submitted to the management process, it is the crucial phase of the tax optimization process and usually the one that takes up the most resources and time.
Finally, the tax control of an optimization strategy consists of verifying the coincidence or not of the results obtained after its implementation with the expected results originally determined during the planning process.
Finally, it is important to comment that both pillars of Tax Management, namely, tax risk management and tax optimization, are forces that are interrelated, but could even affect each other, so the Tax Manager must maintain the best criterion to balance and harmonize the purposes of managing tax risk with the purpose of optimizing the taxpayer's burden.
