Importance of Domicile for Taxation Purposes and Electronic Tax Addresses

In order to understand the importance of domicile in the case of taxation, we must begin by defining the meaning of that term. If we look up the term in a Spanish dictionary we find the following definitions:

  1. Fixed and permanent residence
  2. Place where a person is considered to be legally established for the purpose of performing his obligations and exercising his rights.

3.  House where a person lives or is lodged 

Based on this we see that one of these definitions refers to performance of obligations and exercise of rights. 

Articles 27 and 28 of the Civil Code specify what would be considered domicile in the case of individuals and companies, respectively, while Article 203 of the Commercial Code provides that the domicile of a company is the one specified in its articles of incorporation

This being the case, the main reasons for specifying the domicile are: a) to determine applicable law in each specific case; b) to determine applicable jurisdiction; and c) for the valid service of notices. These three reasons apply equally in the case of taxation given that the domicile will be used to determine whether and which tax laws apply to that person, which jurisdiction is applicable in the event of a dispute between the tax administration and the taxpayer and, naturally, for the delivery of notices and tax information for the parties in this taxation relationship.

Article 30 of the Constituent Decree Enacting the Tax Code stipulates who is considered to be domiciled in the Bolivarian Republic of Venezuela for tax purposes, in other words for matters involving compliance with these obligations.

In view of evolving situations and recent changes, the matter of  electronic tax addresses has been gaining importance, and is now regulated by Article 34 of the above-mentioned Tax Code, as follows:

The Tax Administration may establish a mandatory electronic tax address for the purpose of giving notice of communications or other administrative actions that must be delivered to taxpayers. This electronic address will have priority as regards the provisions of Articles 31, 32 and 33 of this Code. The functioning and formalities pertaining to electronic tax addresses will be regulated by the Tax Administration. 

In this regard, we must point out that since this Tax Code, which first provided for electronic tax addresses, became effective in 2014, the Tax Administration has failed to publish any further rules or regulations governing how the system is to work. 

Article 8 of the Electronic Data and Signatures Act does stipulate certain characteristics for legal actions or acts when the law requires that they be set down in writing, namely that the back-up material be accessible and that it meet the following requirements: 1. That the information it contains may be consulted at a later date. 2. That it be kept in the same format in which it was generated, filed or received, or in a format that can be demonstrably proven to accurately reproduce the information generated or received. 3. That all the information that makes it possible to determine the origin and addressee of the data message, the date and time when it was sent or received, be preserved. 

In our opinion, for an electronic tax address to truly work, certain requirements must be met:

  1. There must be a set of special rules governing how it is created and works.
  2. That the rules and regulations clearly specify the information that is to be exchanged between the tax administration and the taxpayers.
  3. That the taxpayers understand how to use this method for the exchange of information with the tax administration. It is also important that the taxpayer agree to or give his consent for the use of this as the preferred system for delivery of notices, in order for the use thereof for this purpose to be valid.
  4. That it specify the time frames and deadlines for delivery of notices using this method.
  5. That, at the very least, it meet the following technical requirements: i) That the information can be accessed at a later date; ii) that transmission of the documents sent can be confirmed, with information concerning the exact dates and times when the messages were sent and received; iii) conservation of the information that make it possible to determine the origin and destination of the documents sent. 

We feel that the main purpose of any electronic tax-address system must necessarily be to facilitate communication between the different tax administrations and their taxpayers so as to make it easier and simpler for taxpayers to carry out formal procedures from their places of business and/or homes.   

Ysabel Figueira G.