Venezuelan Tax Office Shuts Down Phone Company

by Leroy Baker, Tax-News.com, New York

03 November 2005

CA Nacional Telefonos de Venezuela (Cantv), the country's largest fixed line telephone company, has become the latest target of the Venezuelan tax authority, which is leading a general crackdown on domestic and foreign companies that breach the country's tax rules.

According to a statement from Venezuela’s National Tax and Tributary Administration Service (Seniat), the company's administrative and commercial offices in the country were closed for 48 hours on Tuesday for apparent "irregularities" in its value added tax records. The company was also fined 735,000 bolivars (US$342).

In response to the closure, Cantv stated that it has: "made necessary arrangements to sustain normal operations and maintenance of its telecommunications networks to provide continued quality service to its customers.”

The Venezuelan tax authorities have recently taken action against a number of large multinational firms operating in the country as the government continues to pursue an aggressive zero tolerance policy towards evasion.

Last month, it emerged that Seniat had ordered the temporary closure of a number of foreign companies, including IBM and Bosch Rextroth, due to bookkeeping irregularities relating to income tax and value added tax.

At the same time, Seniat also revealed that it had ordered the temporary closure of a further 15 domestic and international business, including Nokia, Ericsson and Honda, for periods varying between 24 and 48 hours.

As the world's fifth largest oil exporter Venezuela has been especially keen to improve tax collection from the oil sector, and has accused foreign oil companies of avoiding $3 billion in taxes resulting from deals struck under the leadership of former President Rafael Caldera in the 1990s.

Around two dozen oil companies including Chevron, BP and Total have reportedly been targeted by the Venezuelan authorities for evading taxes.

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