Implications of Formal Duties in Agricultural Enterprises

Written by:Diomer Antonio Galán Rincón.

Bachelor's Degree.Public Accounting / MSc.Science of Higher Education.

The formal duties of organizations have a great incidence and integrate the economy of a country and this falls on financial activities depending on the design of monetary, fiscal, exchange and external policies, among others. According to "Escalante" (2009), these are the obligations that the Law or regulatory provisions and even the tax enforcement authorities, by delegation of the Law, impose on taxpayers, responsible parties or third parties to collaborate with the administration in the performance of its duties.

The mismanagement of these elements has generated in some countries the existence of an economic imbalance that originates a high degree of generalized poverty, preceded by social, business and governmental corruption. The Venezuelan State faces great instability due to successive changes referred to economic policies that have not been consolidated, in turn, adopted and intensified measures to protect the economy.

”Every person has the duty to contribute to public expenses through the payment of taxes, fees and contributions established by law".

This implies that taxpayers will be obliged to cooperate with the state through the payment of taxes established in various special and tax laws

”It establishes the formal duties that taxpayers, responsible parties and third parties are obliged to comply with all these related to the tasks of inspection and investigation carried out by the Tax Administration".

That is why the producers of the Venezuelan countryside cannot remain static in front of all the legislation that the country presents, therefore the imperative need arises that there are businessmen who know directly or through their advisors, the benefits, disadvantages and sanctions that any law that governs their commercial activity entails.

On the other hand the Agricultural Companies are exonerated from the payment of Income Tax, through presidential decree number 285 dated August 07, 2013 where it establishes:

Article 1: The following Venezuelan source net income from the primary exploitation of agricultural, forestry, livestock, poultry, fishing, aquaculture and fish farming activities of those persons who are registered as beneficiaries, in accordance with the provisions of this decree, are exempted from the payment of income tax. However, they must comply with the conditions established in article 5 of the same decree to be able to enjoy this benefit, especially.

Article 5: The benefit established in this Decree shall be subject to the beneficiary person complying with the following conditions:

A) To allocate one hundred percent (100%) of the amount of the tax that would have been payable to: direct investments for the respective activity in scientific and technological research and development, improvement of productivity indexes or in capital goods, which must be made effective during the fiscal year following that in which the exempted net income was generated.

All this situation has inevitably pushed the Venezuelan businessmen to adjust themselves within this regulatory framework, and to include all the new regulations in their tax and financial planning, clearly understanding that the prescription and establishment of such duties are the most appropriate way to achieve their objectives. Failure to comply with the provisions of the exoneration and to submit the required commercial documentation will result in the company having to pay the income tax and it will not be able to rely on the exoneration thereof.

I hope you like my article and I would appreciate all your comments.

1.-Organic Tax Code. (2014). According to Official Gazette 6152, Decree 1434 of November 18, 2014. Caracas.

2.-Constitution of the Bolivarian Republic of Venezuela. (1999). Official Gazette# 5.453 (Extraordinary). March 3, 2000. Caracas.

3.- Escalante D Petro; Hultt R Neyi, (2009) Deberes Formales a Cumplir las Personas Naturales. Mérida-Venezuela.

4.- GACETA OFICIAL (Nº 40.223 DATED AUGUST 07, 2013). Presidency of the Republic. Decree No. 285. 07/08/2013. Exoneration Decree.