Debit Tax Expires and Other Developments

Tax on Bank Debits
Tax on Telecom Services
VAT Refund to Exporters

Tax on Bank Debits

The tax on bank debits (0.5% on each debit from bank accounts, including by use of credit cards), which was established by the Tax on Bank Debits Act, has come to an end. When it was established, it was to be applicable for one year from May 14 1999. The end of the tax means that there will be more flexibility in making financial transaction. For the past year, parties conducting transactions have tried to design them in such a way as to avoid the tax.

Tax on Telecom Services

The Telecommunications Organic Act, in force from January 1 2000, establishes the following taxes and contributions:

• A 1% tax on gross income of radio and television broadcasting companies and a 2.3% tax on gross income of all other telecommunications service companies must be paid each quarter.
  
  
• A quarterly contribution of 0.5% of gross income of all persons performing telecommunications services is assigned to the Venezuelan Telecommunications Authority in order to finance the authority's activities.
  
  
• Parties who use radio spectrum must make a yearly contribution to the authority of up to 0.5% of gross income. However, radio and television broadcasting services must make a yearly contribution of up to 0.3% of gross income.
  
  
• Contributions to the Universal Services Fund and the Research and Development of Telecommunications Fund are set at 1% of gross income and 0.5% of gross income, respectively.

Except for television and radio broadcasters, all other telecommunication service providers will be taxed (or make contributions) based on their gross income after contributions to the Universal Services Fund and the Research and Development of Telecommunications Fund have been deducted from their gross income.

The Telecommunications Organic Act also states that telecommunications activities are not subject to state or municipal taxes.

VAT Refund to Exporters

The finance minister has issued instructions on verifying applications for VAT (value added tax) refunds to exporters. The instructions detail how the tax administration will process VAT refund applications. The instructions are designed to make the procedure less burdensome.

For further information on this topic please contact Emilio Pittier at Araque Reyna Sosa Viso & Pittier by telephone (+58 212 953 9244) or by fax (+58 212 953 7777) or by e-mail ([email protected]).