On 27 March 2017, the President of Venezuela created a plan referred to as the Plan to Bolster the Automotive Industry: Venezuela in Movement (Plan de Reimpulso de la Industria Automotriz "Venezuela en Movimiento")3 and established VAT and import taxes exemptions. The plan became effective on 27 March 2017, and will have a maximum duration of three years.
The plan strengthens the Venezuelan automotive industry through internal sales of vehicles and motorcycles and imports of the components defined for their production and is referred to as the Regime of Imported Assembly Material for Vehicles(Régimen de Material de Ensamblaje Importado para Vehículos, or MEIV), with the own resources of dealers or individuals, or another regime for imports of imported assembly material.
The plan includes the following programs:
1. Vehicle of Individual Use , meaning vehicles produced or assembled in Venezuela of 2,000 cc or less).
2. Vehicle for the load of freight, meaning pickup trucks, articulated trucks and light, medium and heavy trucks.
3. Production Motorcycle, meaning motorcycles produced or assembled in Venezuela of 250 cc or less.
Participation in the plan
Car and motorcycle manufacturing companies that participate in the plan shall, within 60 continuous days as of 27 March 2017, sign affiliation agreements for each program with the Republic of Venezuela, through the Ministry of the People's Power for Economy and Finance, to assemble and sell the vehicles and motorcycles in Venezuela.
VAT and Import Taxes exemption
Transactions carried out within the respective programs mentioned above, are exempt from payment of VAT and customs duties, according to these terms:
1. Imports of parts, pieces, and components for the assembly of vehicles and motorcycles, referring to MEIV regime, carried out by the manufacturing company with its own resources.
2. Domestic sales of vehicles, made by manufacturing companies, which have signed the affiliation agreement.
3. Sales of vehicles and motorcycles made by concessionary companies authorized by the manufacturing company to individuals and entities that comply with the Decree.
Exemption operations shall be carried out by manufacturing companies that have subscribed to the corresponding affiliation agreement and the concessionary companies that have been authorized by the manufacturing company for the sales of vehicles and motorcycles within the determined programs.
Exemption of the 15% luxury consumption tax
The Plan also exempted the sales of vehicles assembled in Venezuela from the payment of the additional 15% VAT rate4. It is not clear whether the exoneration also applies to the sales of motorcycles.
Additional regulations established by the Revenue Service
The National Integrated Service of Customs and Tax Administration (Revenue Service) shall establish through Administrative Guidelines, the formalities, documents, time periods and corresponding mechanisms for implementing the above exonerations.
1. Import License
The manufacturing companies ascribed to the plan may exceptionally obtain import licenses, in the following cases:
i. Vehicles or motorcycles of their own brand, or the brand of the companies with verifiable legal relationship established internationally.
ii. Models not assembled in the country, up to an amount that does not exceed 30% of the total number of vehicles and motorcycles. For distributing licenses during 2017, the production of 2015 will be reviewed, and, in the later years, the projection of production of the same year the license is requested will be reviewed.
The assembly companies that participate in the Programs and work under the own resources framework, of concessionaries or individuals, should assign 10% of total collected revenue of the portion paid in foreign currency for vehicles produced and imported under this framework for acquiring imported raw materials (MEIV and local parts production) needed for the production of units to be sold entirely in Bolivars.
2. Acquisition of vehicles and motorcycles
Individuals and entities may acquire vehicles and motorcycles produced within the framework of the Bolster Plan, although individuals and the company Venezuela Productiva C.A.5 will have priority. Other entities may purchase vehicles and motorcycles in these cases:
i. For private productive use.
ii. For selling, when the entity is a concessionary company or a national public administration entity authorized by the national assembly company.
iii. To allow an insurance company to comply with the insurance beneficiary in a substitutive indemnity in kind in agreement within an insurance contract, in the cases of total vehicle loss for accident, unforeseeable circumstances, or events of force majeure.***