In Venezuela, tax exemptions are granted by law (as passed by the National Assembly) and operate automatically. The executive branch grants tax exonerations, through presidential decrees, in cases authorised by law. A transaction is not subject to tax liability when it is not contemplated in the law as a taxable event. Although it is not technically necessary if the taxable events are properly defined, certain laws, such as the VAT Law, list some of the transactions not subject to tax liability. In 2012, the president issued various VAT exoneration decrees, as summarised below.
- VAT exoneration on final import of personal property and provision of services related to the start-up of the mixed company for the production of construction inputs
Presidential Decree No. 8.699 provided VAT exoneration for the final import of tangible personal property and the provision of certain services related to the start-up of the mixed company created by the Venezuelan government for the production of construction inputs. Decree 8.699 will be in effect from 13 December 2011 until 13 December 2013.
Property exonerated from VAT includes sets of mirrors, joints or gaskets, bolts, nuts, washers, pins, dowels, fuel system injectors, high-pressure fuel pump, water pumps, automotive vehicle compressors, oil filters, air conditioning filters, belt and chain conveyors, road tractors for semi-trailers, bulldozers, suspension dampener and radiators. Services exonerated from VAT include topographic plotting, conditioning and levelling, professional building of locker rooms and cabins, construction of mesh gates, provisional adduction of clear waters and electricity, deforesting, excavation, sanitary facilities, and assembly and start-up of technological equipment.
- VAT exoneration on final import of personal property for the members of the Bolivarian National Armed Forces
Presidential Decree No. 8.780 exonerated from VAT liability the final import of tangible personal property made by agencies and entities of the National Public Power to be used exclusively for the social security program of the members of the Bolivarian National Armed Forces. Decree 8.780 was in effect from 25 January 2012 until 25 January 2013.
Presidential Decree No. 9.133 exonerated from VAT liability the final imports of tangible personal property made by agencies and entities of the National Public Power, to be used solely in the Social Security Program for the members of the Bolivarian National Armed Forces. Decree 9133 became effective on 14 August 2012, and the benefit will be in force until 14 August 2013.
- VAT exoneration on final import of personal property to be used in the national electric system
Presidential Decree No. 9.108, exonerated from VAT liability the final import of personal property made by agencies and entities of the National Public Administration to be used solely for the maintenance, attention of failures, inspection and supervision of the national electric system. Decree 9.108 will be in effect from 23 July 2012 until 23 July 2013.
- VAT exoneration for the dredging services on Lake Maracaibo
Presidential Decree No. 9.028, exonerated from VAT liability the provision of services performed or used in the country, including those that originate outside Venezuela, contracted by agencies and entities of the National Public Administration, to be used solely for the performance of the Project for the Adaptation of the Maracaibo Lake Navigation Channel. Decree No. 9.028 will be in effect from 29 May 2012 until 29 May 2015.
- VAT exoneration on the importation of goods to be used in the project named "Modernization Of Radio Mundial"
Presidential Decree No.9.134, exonerated from VAT liability the final importation of tangible personal property made by agencies and entities of the National Public Power, to be used in the project "Modernization of Radio Mundial". Decree 9134 became effective on 14 August 2012 and the benefit will be in force until 14 August 2014.
- Terms and conditions for submitting the quarterly statement of VAT exonerated transactions according to Decree 8.038 (Passenger Transportation System)
Administrative Order No. SNAT/2011/00072 ("Order 72") issued by the Revenue Service set forth the terms and conditions for submitting the quarterly statement of transactions that were exonerated from VAT according to Decree No. 8.038 ("Decree 8.038"). Those transactions include the final importations and sale of tangible personal property, and the provisions of services, made by state agencies with regard to mass passenger transportation systems. Order 72 became effective on the day after it was published in the OG.
According to Article 1 of Decree 8.038, when state agencies and enterprises perform or contract the operations that are exonerated, they must submit to the Revenue Service a quarterly statement thereof in printed and electronic media within five days after the expiration of the quarter. Said statement must indicate the following, depending on each case:
- Final importation of tangible personal property: (i) name or corporate name of supplier; (ii) number, date and amount of the commercial invoice set forth in USD with the conversion thereof into VEF, indicating the exchange rate applied; (iii) customs office through which the goods were cleared; (iv) number and date of the import declaration; (v) amount of the taxable basis (setting forth the various items, as the case may be); and (vi) amount of VAT exonerated
- Domestic sales of tangible real property: (i) name or corporate name, tax domicile and RIF number of the supplier or seller of the goods; (ii) number, date, control number and amount of invoice; and (iii) exonerated VAT amount
- Rendering of domestic services: (i) name or corporate name, tax domicile and RIF number of the supplier or provider of the services; (ii) number, date, control number and amount of invoice; and (iii) exonerated VAT amount
- Provision of services from abroad: (i) name or corporate name of the service; (ii) domicile abroad; (iii) number of invoice or contract; (iv) date of the transaction; (v) amount expressed in US$ and its conversion into VEF; and (vi) amount of exonerated VAT.
The report of exonerated transactions for October, November and December 2011, as well as any other statement of transactions that has not been filed in due time, since the effective date of said decree, should have been submitted during the first five business days of January 2012.
First issue of CERTs for 2012
Resolution No. 3.248 issued by the Ministry of the People’s Power for Planning and Finance (the "Ministry"), issued the first Special Tax Reimbursement Certificates ("CERTs") for 2012 (Resolution 3.248). Resolution 3.248 became effective on 3 September 2012. CERTs are electronic securities issued by the Venezuelan Central Bank and are placed by the Ministry of Popular Power of Planning and Finance in favour of the beneficiaries. The beneficiaries may use the CERTs to offset other federal taxes collected by the republic (e.g., income tax, VAT, customs duties, customs service fees and certain telecommunications taxes). The beneficiaries may also assign the CERTs to other taxpayers for the same offsetting purposes, normally at a discount. CERTs are deposited and remain under electronic custody with the Venezuelan Central Bank, which will deliver them by electronic transfer of the securities position to the beneficiary in a private bank.
According to Resolution 3.248, the first CERTs issue of 2012 shall be for VEF800 million, to be used for reimbursing the tax credits generated by the VAT paid on the importation activities, the acquisition of capital goods and the reception of services during the pre-operative stage of certain VAT taxpayers. The CERTs shall have a term of two years as of their placement by the ministry in favour of the beneficiaries.
The CERTs issued will be deposited and maintained under electronic custody with the Venezuelan Central Bank, which shall make their delivery through an electronic transfer of securities position to the beneficiary. The ministry will set the date of the full or partial delivery of the tax credits arising from the issuance of the CERTs, and will place them by means of written or electronic communication through any electronic platform or system used as delivery system. The Venezuelan Central Bank, as custodian entity of the CERTs, must withdraw from the National Integrated Electronic Securities Custody System those CERTs that are not transferred to their custodian banks in order to be made available to their beneficiaries.