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Anti-dumping Measures: Impact on Import Regime and VAT


Venezuela has implemented regulations to safeguard domestic producers from its international competitors against injury caused by unfair international trade practices. The Law Against Unfair International Trade Practices, known as the Anti-Dumping Law came into effect on 18 June 1992. Subsequently, the Regulations of the Law Against Unfair International Trade Practices were published on 26 April 1993. Taxand Venezuela highlights the objective of these regulations and the steps being taken to prevent 'dumping' of foreign products taking place.

Accordingly, the objective of this Law is to "safeguard the interests of the productive sectors, as well as the equally important economic and social sectors within the domestic economy, by means of a rigorous verification process of the injury directly related to the existence of unfair trade competition." The Anti-Dumping and Subsidies Commission (CASS is the Spanish acronym) is the organisation in charge of investigating and sanctioning unfair international trade practices. In addition to this, the effective collection of antidumping and countervailing tariffs corresponds to the National Integrated Service of Customs and Tax Administration (SENIAT), an organisation currently undergoing revisions and adjustments in the execution and application of the acts issued by this Commission.

Dumping is the technical term used in international trade to describe the sale of a product in foreign currency at a price lower than the very cost of production, or lower than the price at which it is sold in the internal market of the country of origin. This practice introduces an element of unfair competition in international trade, and so several countries, including Venezuela, have adopted laws authorising special anti-dumping duties.

One of the most important aspects of this topic involves the importing of products similar to those which have been subject to anti-dumping and countervailing tariffs. The terms and conditions established in the Decision of the Anti-Dumping and Subsidies Commission, understood as a product that is identical or whose characteristics closely resemble those to which anti-dumping or countervailing measures have been applied, whether temporarily or permanently.

The Anti-Dumping and Subsidies Commission has increased activities to be developed by the SENIAT, aimed at achieving greater efficiency in charging anti-dumping and countervailing duties. In view of this, a Resolution was passed wherein importers of goods similar to those products subject to anti-dumping or countervailing duties are required to present a certificate of origin of the merchandise. This is to prove that such imports did not originate in a country on which these measures have been imposed, so as to prevent the evasion of anti-dumping duties by changing the origin or declaring a false origin of the merchandise.

By virtue of the above, importers of merchandise similar to merchandise subject to anti-dumping and countervailing duties, must substantiate its origin by presenting a certificate of origin issued by the competent government authority to the main customs office, in order to prove that said products do not originate in countries where these measure may apply.

Additionally, in accordance with the applicable Value Added Tax legislation, it must be noted that the required anti-dumping and countervailing tariffs modify the tax base for determining the Value Added Tax. Therefore the possible liquidation of anti-dumping duties that could be enforced by the competent organisation could cause an adjustment in the Value Added Tax imposed at the time of import of merchandise to the country.

In the case of the indicated adjustment to the Value Added Tax, in addition, a sanction will be imposed, as established in Article 111 of the Organic Tax Code effective in Venezuela, due to the existence of an illegal reduction in revenue to the National Treasury.


Taxand's Take

Dumping is a trade practice barred by multiple international agreements, wherein a company in a determined country commercialises products in a foreign market at a price lower that the current home market price or lower than the cost of production, therefore resulting in unfair competition for the domestic industries of the import country, impeding them from competing with their own products at those prices.

In practice, failure to present the certificate of origin of the merchandise as proof that the product does not originate in a country to which anti-dumping measures have been applied by The Anti-Dumping and Subsidies Commission, could result in the liquidation of permanent anti-dumping duties on imports, adjustments to the tax base of the Value Added Tax declared in customs, as well as sanctions imposed, as set forth in the Organic Tax Code. Should these adjustments be inappropriate and have been arbitrarily implemented by the competent authority, an appeal may be made before the administration or the judicial court.

Your Taxand contacts for further queries are:
Luis Mart?nez
T. +58 212 750 0095

Aileen Figueroa
T. +58 212 750 0095

Taxand's Take Author