Notes on the Tax Administration’s (re)characterization powers and the General Anti-Avoidance Rule (GAAR) in Venezuela

Abstract

This paper focuses on the Tax Administration’s power of characterization recharacterization and its adoption into Venezuelan legislation through the General Anti- Avoidance Rule (GAAR) established in Article 16 of the Organic Tax Code. To this end, after reviewing conceptual notions regarding the tax assessment function and the recharacterization power itself, the study centers on the analysis of the Venezuelan GAAR, with special emphasis on its purpose, conditions for application, and the inherent risks involved. In doing so, it addresses categories such as the substance over form principle and the business purpose test. Finally, the study examines the relationship between the Tax Administration’s recharacterization power and the privilege of administrative self-enforcement.