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Venezuela: Net worth tax for certain taxpayers, 30 November 2019 deadline

Venezuela: Net worth tax for certain taxpayers

A law enacting a net worth tax to be levied on certain taxpayers was enacted in July 2019 and then “reprinted” in August 2019 with certain changes or corrections. This was followed by an administrative ruling that provided guidance concerning the requirements to file a return and pay the net worth tax.

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The initial return for the net worth tax is due on or before 30 November 2019.

Taxpayers subject to the net worth tax are those having a net worth exceeding 150,000,000 “tax units” (approximately U.S. $348,000). Only those taxpayers (individual persons or legal entities that have been specifically designated as such by the Venezuelan tax administration) are subject to this tax. Those taxpayers subject to the net worth tax are known as “special taxpayers.”

Certain “territoriality criteria” also apply for purposes of determining taxpayers subject to the net worth tax. For instance, the tax can apply to the entire net worth of assets, goods or property regardless of their location or the location where rights involving such property may be exercised. Non-residents also may be subject to the net worth tax for assets, goods or property located in Venezuela’s national territory (and similarly with respect to rights involving such property that may be exercised in the national territory). Concerning a permanent establishment in Venezuelan, individuals and entities also may be “special taxpayers” subject to the tax for the entire net worth attributable to the permanent establishment, regardless of the place where the goods, assets or property may be located or the place where the rights involving them may be exercised.   

Other rules for the net worth tax include the following:

  • The net worth tax will be assessed on the assets and properties’ net worth value as of 30 September each year, and the first tax period will end 30 September 2019.
  • Certain entities are exempt from the net worth tax including Venezuela’s government and political bodies, the Central Bank of Venezuela, and entities owned by the government.
  • Additionally, property registered with the tax administration as an individual’s principal residence is exempt from the net worth tax, as are the assets and property of diplomatic and consular missions located in the country.
  • The tax base is determined by excluding liabilities or encumbrances from the total value of the assets, goods, property and rights. The law establishes valuation criteria for assessment of the value of goods, assets or property comprising the net worth of taxpayers subject to the tax. For instance, the value of real estate located in Venezuela will be the highest of (1) the value assigned in the municipal cadaster register, (2) the fair market value, or (3) the value resulting from updating the acquisition price under a methodology provided of the tax administration. The value of jewelry, works of art, antiques, and in general other assets will be the higher of (1) the fair market value, or (2) the value resulting from updating the acquisition price under a methodology provided by the tax administration. The value criterion for stocks and shares will be the value resulting from dividing the amount of capital plus reserves by the number of securities. 
  • The tax rate can range from 0.25% to 1.50%, and accordingly has a fixed rate of 0.25%.
  • The tax is not deductible for income tax purposes.
  • The filing of the net worth tax return and the payment of the tax must take place between 1 October and 30 November annually.

 

For more information, contact a tax professional with KPMG’s Latin America Markets practice or a tax professional with the KPMG member firm in Venezuela:

Alfonso A-Pallete | +1 (305) 913 2789 | apallete@kpmg.com

Alejandro Gomez | + 58 212 277 41 90 | adgomez@kpmg.com

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