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Venezuela

Country Name: Venezuela
Currency: Venezuelan Bolívar (VES)
Primary Tax Authority: Servicio Nacional Integrado de Administración Aduanera y Tributaria (SENIAT) – National Integrated Customs and Tax Administration Service
Key Legislation:

  • Income Tax Law (Ley de Impuesto sobre la Renta)
  • Value Added Tax Law (Ley del Impuesto al Valor Agregado – IVA)
  • Organic Tax Code (Código Orgánico Tributario)

Fiscal Authority Allocation

Centralized Fiscal System:
Venezuela operates a centralized tax system, with the National Integrated Customs and Tax Administration Service (SENIAT) responsible for administering and collecting all major taxes, including corporate income tax (CIT), personal income tax (PIT), and value-added tax (VAT). Local governments collect property taxes and certain municipal fees, but most tax revenue is managed centrally.

Corporate Income Tax (CIT)

Standard Rates:
Venezuela uses a progressive CIT rate structure:

  • Up to VES 2,000: 15%
  • VES 2,001 – VES 3,000: 22%
  • Above VES 3,000: 34%

Resident companies are taxed on their worldwide income, while non-resident companies are taxed on Venezuela-sourced income.

Corporate Forms and Taxation:

  1. Limited Liability Company (Sociedad de Responsabilidad Limitada – SRL): The most common corporate form, subject to the progressive CIT rates.
  2. Corporation (Sociedad Anónima – SA): Typically used by larger companies, taxed at the same progressive CIT rates.
  3. Branches of Foreign Companies: Taxed at the same progressive rates on Venezuela-sourced income.

Exemptions and Incentives:

  • Free Trade Zones: Companies operating in Venezuela’s designated free trade zones benefit from CIT and VAT exemptions, along with customs duty reductions.
  • Tax Incentives for Strategic Sectors: Certain sectors, such as agriculture, manufacturing, and renewable energy, may qualify for tax holidays, reduced rates, or specific deductions.

Goods and Services Tax (GST) / Value-Added Tax (VAT)

Standard Rate: 16%
Venezuela applies a VAT rate of 16% to most goods and services. VAT is levied on the sale of goods, the provision of services, and imports. VAT filings are generally made monthly.

Exemptions:
Certain essential goods, medical supplies, educational services, and public transportation are exempt from VAT. Exports are zero-rated, allowing businesses to reclaim VAT on input costs associated with exported goods.

Personal Income Tax (PIT)

Progressive Rates:
Venezuela applies a progressive personal income tax system, with rates ranging from 6% to 34%. Tax rates are applied as follows:

  • Up to 1,000 tax units (TUs): 6%
  • 1,001 to 1,500 TUs: 15%
  • 1,501 to 2,000 TUs: 22%
  • Above 2,000 TUs: 34%

Tax units (Unidades Tributarias – TUs) are adjusted yearly and serve as a basis for tax brackets, penalties, and deductions.

Dividends:
Dividends paid to resident and non-resident shareholders are subject to a 34% withholding tax, though this can be reduced if certain conditions are met or under applicable tax treaties.

Additional Mandatory Contributions

Social Security Contributions:
Both employers and employees are required to contribute to Venezuela’s social security system, which provides pensions, healthcare, and unemployment benefits.

  • Employer Contribution: 9% to 11% of gross salary, depending on the industry.
  • Employee Contribution: 4% of gross salary.

Withholding Taxes

  • Dividends: 34%
  • Interest: 34%
  • Royalties: 34%
    Withholding tax rates may be reduced under Venezuela’s double taxation agreements (DTAs).

Transfer Pricing Rules

Venezuela follows OECD guidelines on transfer pricing. Related-party transactions must be conducted at arm’s length, and businesses are required to maintain transfer pricing documentation for cross-border related-party transactions that exceed certain thresholds.

Special Tax Regimes

  • Free Trade Zones (Zonas Francas): Businesses operating within Venezuela’s free trade zones enjoy CIT, VAT, and customs duty exemptions for a specified period. These zones are primarily designed to attract foreign investment in manufacturing and export-driven activities.
  • Strategic Sectors: Venezuela offers tax incentives to strategic sectors such as agriculture, infrastructure, and energy. These incentives include tax holidays, reduced CIT rates, and deductions for capital investments.

Other Taxes

  • Real Estate Tax: Local governments levy real estate taxes, which are calculated as a percentage of the assessed value of the property. Rates vary between 0.1% and 1%.
  • Capital Gains Tax: Capital gains are taxed as ordinary income, subject to the CIT or PIT rates. Gains on the sale of real estate or shares are generally taxed at 34%.
  • Excise Taxes: Excise duties apply to products such as alcohol, tobacco, and fuel.

Double Taxation Agreements (DTAs)

Venezuela has signed several double taxation agreements with countries such as Spain, France, and Italy. These treaties help reduce withholding taxes on dividends, interest, and royalties and prevent the double taxation of cross-border income.

Local Taxes

Local governments in Venezuela collect property taxes, vehicle taxes, and certain municipal fees, including business operating licenses. However, income tax and VAT are centrally administered by SENIAT.

Compliance and Reporting

Annual Filing:
Corporate tax returns must be filed by March 31st of the following year. Personal income tax returns are due by the same date. The tax year in Venezuela follows the calendar year.

Penalties for Late Filing:
Penalties for non-compliance or late filing include fines and interest on overdue tax amounts. Interest rates on unpaid taxes are generally 1.5% per month, with additional penalties for prolonged delays.

Recent Developments

Hyperinflation and Tax Adjustments:
Venezuela has experienced hyperinflation in recent years, which has led to frequent adjustments in tax units (TUs) and tax thresholds. The government has also enacted tax reforms to combat tax evasion and increase revenues.

Foreign Currency Transactions:
Due to hyperinflation and economic instability, Venezuela allows certain transactions, including tax payments, to be conducted in foreign currencies (primarily USD). This move is intended to stabilize tax collection and improve compliance.

Digital Services Tax:
Venezuela has implemented a digital services tax aimed at taxing foreign companies that provide digital services in the country, such as streaming platforms, online marketplaces, and software services.

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