New Venezuelan VAT, customs duties and customs service fee exoneration for the import of foodstuffs

Presidential Decree No. 3,4581 exonerated the payment of the VAT, customs duties and custom services fee on the final imports of foodstuffs, made by the National Administration entities, destined to the Venezuelan population. The foodstuff include goods such as but not limited to: powdered milk, wheat flour and refined sugar. The exoneration entered into force on June 12, 2018 and will be valid until June 12, 2019.

The beneficiary of the exoneration, at the time of registering their customs declaration, must present: (i) the descriptive list of the imported goods; (ii) the commercial invoice issued to the beneficiary; and (iii) the exoneration letter issued by the National Integrated Service of Customs and Tax Administration.

The Venezuelan Finance Authority set in 2.5% the special contribution payable in 2018 by entities regulated by the Office of the Superintendent of Insurance Activities

Insurance and companies, companies involved in prepaid medicine services and legal entities that finance insurance premiums are subject to a monthly special contribution to finance the activities of the Office of the Superintendent of Insurance Activities. The rate of the special contribution must be between 1,5 % and the 2,5% and is set annually by the Ministry of the Peoples Power of Economy and Finance. The Ministry set the rate at 2.5% for fiscal year 2018.2 The rate will apply to:

(i) The net premiums collected by insurance and reinsurance companies and the consideration collected for the provision of bonds;

(ii) The amounts collected by companies engaged in prepaid medicine under health plan contracts or services; and

(iii) The net interest income collected by premium financing companies in consideration for the financing granted to beneficiaries.

Insurance companies may deduct from the premiums collected the reinsurance premiums paid by them, up to the rate pertaining contribution made, calculated at the same rate used by the assigning insurance company, in which case the rate will be reduced from the assignee's tax base. The provision will also apply to bonds.

New Venezuelan VAT, customs duties and customs service fee exoneration for school supplies

Presidential Decree No. 3.5533 exonerated the payment of VAT, customs duties and customs services fee on the final import of movable property made by the entities of the National Public Administration, destined to cover the demand of school supplies that for 2018-2019. The Decree came into force on July 25, 2018 and the exoneration will be valid until July 25, 2019.

The beneficiary of the exoneration, at the time of registering the customs declaration, must present: (i) the descriptive relation of imported goods; (ii) the commercial invoice issued to the beneficiary; (ii) the exoneration letter issued by the National Integrated Service of Customs and Tax Administration.

The final import of the exonerated goods must be made through a customs office chosen by the beneficiary; the office must register the exonerated operation, date of the import, CIF value and how many imported goods, customs duties, exonerated VAT, and compensatory and anti-dumping duties and late payment interest.

New VAT and customs duties exoneration in Venezuela for the imports good and provision of services regarding electoral processes

Presidential Decree No. 3.5514 exonerated from VAT, customs duties and customs service fees imports and domestic sales of movable property made by the National Electoral Council ("Council"). The goods imported include but are not limited to: computers, printers, hard drives, motherboards and other electoral articles. The Decree entered into force on July 26, 2018 and the exoneration will last a term no longer than two years.

The Council, at the moment of registering the import declaration, must present: (i) the descriptive relation of the imported goods; (ii) the commercial invoice issued to the Council; and (iii) the exoneration letter issued by the National Integrated Service of Customs and Tax Administration.

The Decree also exonerated from VAT liability the provision of independent services executed or benefited from in Venezuela, hired by the Council, for the realization of electoral processes. The services include but are not limited to: licensing and equipping the new electoral platform, production and enlistment of voting machines, and making reports and notices.

The final importation of the exonerated goods must be made through a customs office chosen by the Council; the office must register the exonerated operation, date of the import, CIF value and how many imported goods, customs duties, exonerated VAT, and compensatory, anti-dumping and default duties

Ordinary VAT taxpayers and the agents of the Council, that purchase, sell or provide services with the goods imported, must indicate for each exonerated operation, the purchase order, service order or contracts, indicating in the same or in the invoices the mention "Exonerated Operation".

Ordinary VAT that make domestic sales and provide services that can benefit from the exoneration must issue a Certificate of Exonerated Output VAT according to the formalities of the Administrative Guidelines No. 71 regarding the General Rules for the Issue of Invoices and Other Documents.5 Those taxpayers may, subject to certain requirements, recover the input VAT derived from the VAT paid on the importation or acquisition of goods and services.6

New exoneration of the Income tax on the newly established Special Economic Zone Tinaquillo - San Carlos, Estado Cojedes, in Venezuela

According to framework of state of emergency and economic emergency in force in Venezuela since 2016, the executive power released a Presidential Decree No. 3.486 ("Decree No. 3.486"), July 3 of 2018, published on an Extraordinary issue of the Official Gazette of the same date, in which contemplates the creation of the Especial Economic Zone ("EEZ") Tinaquillo-San Carlos in the State of Cojedes7. The EEZ is limited by the municipalities of Tinaco, Tinaquillo, Ezequiel Zamora and Lima Blanco, with a surface area of 4.465 km2 and with the purpose of promoting mining (metal and non-metal), forestry, tourism and agri-food activities.

Decree No. 3,486 exonerated the payment of the Income Tax ("IT") to the producers established in the EEZ, according to the following:

  • Legal entities will have 100% exoneration of the IT, during the period established on the Installment Agreement with the board directors of the EEZ, to get the adequate process for the export of products.
  • If on the first year of operation, at least 70% of its production is due to exports, benefit of the 100% exoneration of the IT is maintained, If the opposite occurs, they must cancel the 50% of the pertinent fee of the IT. This benefit will last for the first five years of the Operation
  • If from the second year of the operation they maintain a level of export of 70% of it production, they will obtain a reduction of 75% of the pertinent fee of the IT. If the opposite occurs, they will only obtain a 25% exoneration of IT. This condition will be maintained until the tenth year of operation.
  • The percentages of the reduction of the IT will be augmented when the companies established in the EEZ, manages to incorporate the national components in their productive processes based on the following table:

  • In the cases which the sum of the IT reduction granted by the compliance of the conditions, is higher than 100%, it will be exempt up to 100% of the IT caused.
  • Taxpayers should apportion common costs and expenses to taxed and exempt activities.