Transfer pricing as a mechanism for upholding the arm’s length principle in Bolivarian Republic of Venezuela

Abstract

In the Bolivarian Republi of Venezuela, the protection of the arm’s length principle through transfer pricing goes beyond mere regulatory compliance, serving as a crucial instrument to foster a fair and transparent economic environment. In this context, it was deemed relevant to analyze the significance of transfer pricing as a key mechanism for maintaining the arm’s length principle in commercial transactions carried out in Venezuela, and to examine how these practices not only meet legislative requirements but also reinforce economic integrity and fairness across the nation. This study falls under the category of contemporary cross-sectional field research with an interpretative (qualitative) and analytical scope. Documentary review was employed as the data collection technique, including the examination of electronic sources and specialized literature. Additionally, an in-depth analysis of the collected sources was conducted to define the regulatory framework supporting the preservation of the arm’s length principle, the nature of transfer pricing, and the categorical criteria that define international transactions in Venezuela. The findings demonstrate that by implementing a comprehensive legal framework aligned with international standards, the Bolivarian Republic of Venezuela can ensure that transactions between related parties accurately reflect actual market conditions. This, in turn, promotes tax equity and economic integrity while preventing practices that could lead to tax basis erosion and the improper shifting of tax benefits.