The Income Tax Law establishes a base exemption or case of non taxable income for individuals domiciled in Venezuela. Individuals domiciled in Venezuela, deriving worldwide income below 1,000 Tax Units (Bs. 177,000.00 for fiscal year 2016) and gross taxable income not exceeding 1,500 Tax Units (Bs. 265,500.00 for fiscal year 2016) are not required to declare and pay income tax. Individuals domiciled in Venezuela whose income exceeds the limits indicated above must file their income tax return online and pay the corresponding income tax on their worldwide income. Tax tariff No. 1, applicable to individuals, provides different tax brackets ranging between 6% and 34%, depending on the amount on the taxpayer's net income. The 6% rate applies to the portion of the income not exceeding 1,000 Tax Units.

In what seems a repetition of what occurred in 2016,[1] Presidential Decree No. 2,680 (Decree 2,680),[2] exonerated from income tax liability the Venezuelan source annual net income derived by individuals domiciled in Venezuela during fiscal year 2016 not exceeding 6,000 Tax Units (e.g., Bs. 1,062,000.00 for fiscal year 2016). Decree 2,680 entered into force on 18 January 2017.

In practice, Decree 2,680 increased the base exemption from 3,000 to 6,000 Tax Units. Only individuals that file their final income tax return by 31 March 2017 with respect to fiscal year 2016 will benefit from the exoneration.

Currently, the income tax return (Form DPN 25) that appears in the National Integrated Service of Customs and Tax Administration's (Revenue Service) Website,[3] only shows box No. 17 named ''Exoneration Decree No. 2,680 Official Gazette N° 41,077 dated 18/01/17 / Other Exempt or Exonerated Income'' if the taxpayer selects, in the home page, that he received exempt or exonerated income and only for the case of employees with Venezuelan source income. In this case, the taxpayers must fill box No. 17 with the corresponding amount (e.g., Bs. 1,062,000.00 if he received Venezuelan source net taxable income exceeding 6,000 Tax Units) and fill box No. 2 named ''Wages, salaries and similar earnings and participations in entities (less Exoneration Decree)'' with the exceeding amount. In other words, if the employee with Venezuelan source income earned income of 7,000 Tax Units during fiscal year 2016, he/she will report 6,000 Tax Units in box No. 17 described above and the remaining 1,000 Tax Units in box No. 2.

Employee taxpayers and/or non-employee taxpayers with Venezuelan source income and/or foreign source income, however, will benefit from the exoneration by reducing their Venezuelan source net taxable income equivalent to 6,000 Tax Units. In this sense, any of the taxpayers described above and whose net taxable income was 7,000 Tax Units must report in its final income tax return 6,000 Tax Units in the section "Other Exempt and Exonerated Income", and 1,000 Tax Units as net taxable income (i.e., 7,000-6,000 = 1,000) and pay income tax according to Tariff No. 1. From a conservative point of view, any of the taxpayers described above and whose net taxable income was 5,700 Tax Units (or less than 6,000 Tax Units) must file the corresponding income tax return, report 5,700 Tax Units in the section "Other Exempt and Exonerated Income", report zero net taxable income, and pay no tax. Another position for this case would be to consider that individuals that earned a net taxable income not exceeding 6,000 Tax Units are exempt from filing the income tax return for fiscal year 2016 or paying any tax.

According to Decree 2,680 individuals who filed their income tax return and paid their income tax before January 17, 2017 without taking into consideration the exoneration, will have a tax credit equal to the income tax paid in excess. These individuals may (i) offset the tax credit against other taxes different from VAT (for example, to their income tax applicable to fiscal year 2017); or, (ii) assign the tax credit to other taxpayers for the same offsetting purposes. These assignments are usually made at discount. Decree 2,680 does not refer to it, but the orthodox way of reporting the tax paid in excess is for the taxpayer to file an amended income tax return in which the individual reports the exonerated taxable base, the lower payable income tax, and the tax credit derived from the overpayment of tax. Taxpayers must file the amended return within the 12 months following March 31, 2017. If they file the return after that term they may be subject to a fine of 50 Tax Units.