At first sight, it is then concluded that the advance provided for by the decree in the field of LRIF constitutes a distortion of the LRIF, which separates the chargeable event of that tax from its taxable amount and converts it into turnover or income tax and is therefore indirect and regressive, which, in a hyperinflationary economy, with regulated and recessive prices, which are far from being a measure of further economic recovery, it makes it a tool of its destruction. There is therefore no doubt that the regulation of an advance by the ISLR on the basis of gross income not only distorts the nature of that tax obligation, but also constitutes a flagrant violation of the principles of progressivity and ability to pay, which are real closures of this tax, since it is precisely the ISLR that is the tax called upon to comply with it par excellence. Calculated on the basis of the EU 30000 U.T X 177 VALUE OF T.U.T FOR 2016 applicable for the year 2016 These are the amounts that the law allows to deduct from the net enrichment received during the financial year to natural persons residing in the country and their equivalents. The result obtained after the application of the corresponding rebate serves as a basis for the application of the rate provided for by law. Calculation based on the U. T In force for the year 2016, i.e. 177 bolivars per U. T If we add to the harmful effects of the application of an advance that taxes turnover and not income that applies daily, which implies a direct effect on cash flows, a VAT advance system that is added to withholdings, increasing the basis of loans, which often have to be repaid without there being a mechanism for adjusting these loans, Implying their depreciation due to the effects of inflation, it can only be concluded that, in the context of the measures taken, the decree presupposes not only the violation of the constitutional principles previously denounced. but this is a failed attempt as a measure to revive the economy and, in addition, an ineffective revenue anticipation measure for the Ministry of Finance, since it affects the profitability of the productive apparatus, which will lead to a decrease in tax collection in the long run. In fact, the forecast of monthly advances based on the previous month`s gross income represents an absolute distortion of income tax, making it a regressive tax that does not measure eligibility to contribute, nor income, but taxes gross income, which affects cash flows and can become recoverable. For this reason, we believe that the above exclusion, if the devaluation of the currency in Venezuela is radical, is a contradictory, irrational and absurd measure that becomes a tax on inflation if we add to this the advance provided for in the decree on a presumed basis not on income, but on gross income.
These taxpayers could be pechando not on the basis of their income but on the basis of their assets, which leads the tax levied to measure directly the ability to pay and progressive par excellence and essentially in a regressive and confiscatory tax for this category of taxpayers. Income tax has always been seen as a tax that directly measures the ability to contribute and is a progressive tax par excellence, so the elements that make up this tax liability must be designed with particular attention and respect for these principles. El hecho imponible del referido tributo es enriquecimiento NETO annual y disponible en el ejercicio fiscal, por lo tanto, su base imponible es la utilidad neta determinada conforme a las reglas de determinación previstas en la Ley. Current legal events sometimes require a broad and detailed study to clarify the application of new measures and regulations. Our Lega InDepth examines in detail the sensitive issues in the legal framework of Venezuela and the world. The basis for calculating the declaration and payment of the (ISLR) would be for those with a net income of $6,000 or more, which is equivalent to 1,062,000 bolivars, using the U.S. value in 177 (2016) as a reference. In accordance with the above, the title of article 27 of the Venezuelan Income Tax Law5 as well as article 4 of the same legal text and articles 36 and 52 of its regulations6 revise the principle of the taxation of net enrichment in accordance with the principle of contributions. The availability of taxable income based on accrued liabilities has not changed. The system of advances provided for in the decree constitutes a serious violation of the principle of legal reserve and the principle of the ability to cooperate and constitutes a real distortion of the ISLR. We will not go into the aspect related to the scandalous violation of the principle of legality, because that would prolong the analysis too much, so we will focus on the impact that this measure presupposes for the ability of the subjects to which it applies to contribute, because we also believe that such a measure can be considered a failure even before its implementation.
Natural persons who have a permanent registered office in Germany are required to make a final declaration in accordance with the enrichments made inside and outside the country attributable to this fixed tax base, in the case of non-resident natural persons, they are required to comply with this formal obligation regardless of the amount of their enrichment. The criterion of availability of income is modified by establishing as a general rule that income is considered to be disposable, since the operations that produce it are carried out, i.e. on the basis of cause. In this vein, the National Constituent Assembly, by specifying in the decree as the basis for calculating the advance on gross income, separates the income tax and transforms it into a tax on income and not on income, thus separating the taxable base of taxation from the event giving rise to this obligation, which violates the principles of progressivity and ability to pay. The general loss of purchasing power of our monetary sign and its inclusion show us that the national legislator has legally recognized the effects that the inflationary phenomenon causes on our economy and its impact on the measurement of the ability to pay, which must be private in our tax system, which measures income tax par excellence. For this reason, it has become necessary to adapt the Income Tax Act to the economy affected by this phenomenon, with the reform of the 1991 Law giving rise to the system of adjustment for budgetary inflation, the main and sole purpose of which is to ensure that taxpayers reflect a wealth situation and economic performance. To determine the effects of the tax base, historical values were adjusted for the effects of inflation. The income tax has been in force in Venezuela since 1942 as a national, direct, personal, subjective, progressive and periodic tax, the purpose of which is the net enrichment achieved during the annual period. In such a way that the net income is the taxable base of taxation, which shows the economic potential to contribute to the satisfaction of the expenses of the legally organized society. In fact, net income represents the net increase in equity in a taxable year. In the case of natural persons qualified by the tax administration as special taxable persons. The calculation is based on the following formula: Based on accounting and its determination rules, there are differences between the treatment according to accounting standards and tax standards.
make the deductions from gross income permitted in Article 27 of the Act, which, unless other legal provisions apply, must correspond to the costs incurred or paid, and to the normal and necessary expenses that are not due to the costs incurred in the country to generate the enrichment. Precisely in order to define the income tax base as the proceeds of income, costs and deductions, the result of the application of the statutory adjustment system for fiscal inflation, which we will discuss later, must be added or deducted. The only enrichments available on a cash basis are those derived from (i) dependent work; and (ii) random winnings. Specific takeover of financial institutions, the banking, insurance and reinsurance sector: for these entities, the basis for calculating the advance is calculated on the basis of the gross income earned the immediate day before, multiplied by the fixed percentage. It should be noted that the term “enrichment” has been replaced by “income” for those who are taxed on the basis of what is caused and accumulated, so that the term enrichment remains only for those who are taxed on the basis of money. Thus, that law lays down the definition of the taxable amount in order to ensure the legal certainty of the taxpayer. It includes the economic measure resulting from the subtraction of costs and expenses from income-generating activities, including profits or losses resulting from the application of the fiscal adjustment system against inflation, which has been eliminated unconstitutionally for special taxpayers and banks. This operation determines the net type of enrichment; In other words, for the calculation, all normal costs and expenses (deductions) necessary to obtain it must be deducted.