Tax News

Jul 11, 2016 | English Blog



Article 127 of the Tax Concertation Law established a series of VAT Exemptions on transfer of goods; however, the same article said that in addition to those contained in the Law, Specific Listing would have to be published by the Ministry of Finance containing all goods that are exempt from transfer tax.


By Ministerial Agreement No. 19-2015, the SPECIFIC LISTINGS OF VAT EXEMPTED GOODS AND MERCHANDISE INCLUDED IN THE ART. 127 OF THE TAX CONCERTATION LAW. Said Agreement contained the full list of exempt goods, in addition to the list of supplies and raw materials necessary for the production of products in paragraphs 1, 2 and 17 of art. 127 of the LCT.


Subsequently, by Ministerial Agreement 26-2015 a series of new goods were added within Exempted Goods contained in paragraph 2 concerning Medicines, vaccines and serums for human consumption, orthotics, prosthetics etc… as well as the paragraph 3 on products, equipment and medical and surgical instruments, as well as some raw materials and inputs for development of veterinary products.


Recently, it was published the Ministerial Agreement 09-2016 where the Final “A” List of End Products that are exempt from VAT in addition to the list “B” of exonerated goods used for the manufacture of End Products is detailed.


The date of entry into force of the provisions regarding to transfer pricing and related parties is increasingly getting closer starting on July 2017, so here are the following recommendations to all those who have transactions with related parties:

1. Documenting/back up by private agreement, or if possible, even better in Public Deed, all new service relationships or purchase / sale of goods with parties related.

2. If the relationship has existed for a long time and there is no supporting documents, private contract or public deed, proceed immediately to conduct such support documentation, if necessary, must be pre-dated, reflecting the actual start date of the relationship.

3. Set the value of the contract and not leave it open to interpretation of the DGI

4. As a general note, the transfer pricing rules do not indicate specific requirements that contracts between related parties must contain, however, the DGI has pronounced by some administrative provisions, some requirements that Contracts in general must contain in order for the expenditure can be recognized as such, for purposes of tax deduction, including the full identification of the parties, both legal and natural persons that represent them in the act. It is essential that the identity numbers of those appearing (Identity Number for Nationals and residence card or passports for foreign) and the RUC numbers of each company must be included.

5. The express consent of the parties is indispensable.