Venezuela: New “organic tax code”

Venezuela: New “organic tax code”

A constituent decree, published in the official gazette No. 6.507 (29 January 2020), reflects a new “organic tax code.”

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Among the tax law changes are the following items.


Tax unit

  • The “tax unit” represents the amount of taxes and penalties subject to the applicable tax rate. The tax unit will be readjusted by the tax administration, upon authorization from the president. However, there is no information concerning the methodology to be used for readjustment or frequency of readjustments to the tax unit.
  • In the case of taxes paid on a yearly basis, the tax unit that exists as of the closing date of the tax (fiscal) year will apply.
  • The tax unit may only be used as unit of measurement for determining domestic taxes subject to the control of the national tax administration as the competent authority.
  • The tax unit may not be used by other bodies and government entities for purposes of determining employment benefits, rates, and special contributions derived from the services rendered by them. These bodies and entities must have a term of one year as of the date of publication of the organic tax code in the official gazette, to substitute their unit of measurement.
  • The use of the tax unit for purposes of calculating penalties imposed by the tax code is substituted by the official exchange rate of the currency of highest value (published by the Central Bank of Venezuela).


Exonerations (exemptions from tax)

  • The maximum term of duration of the benefit of “exoneration” (tax exemption) will be of one year, subject to renewal by the government within the same timeframe.
  • The exonerations granted to non-profit organizations engaged exclusively in religious and cultural activities, as well as certain others as determined by the tax administration, may be for an unlimited time period.
  • Any exoneration of domestic taxes must be contained in a single administrative decision that will be published by the government for each year. Any exoneration not specifically included in that list is null and void.
  • The government may reform the decree, but the effective date of such reform could not exceed beyond the corresponding fiscal year.
  • The government has 60 days from the date of publication of the organic tax code in the official gazette to issue the general exonerations decree of domestic taxes.
  • Exonerations established prior to the date of publication of the decree will remain in full force and effect until the decree is published.


Penalty calculations

  • Any penalties previously listed in tax units will now be expressed in terms of the official exchange rate of the currency of highest value published by the Central Bank of Venezuela. The exchange rate that is effective at the time of payment will be used.
  • Penalties that are established in percentages will be converted into the currency equivalent at the official exchange rate of the currency of highest value, published by the Central Bank of Venezuela and corresponding to the date of the infringement and to be paid by using the value that applies at the time of payment.
  • For infringements committed prior to the effective date of the new organic tax code, provisions contained in the 2014 version will be applied.


Coercive collection of tax debt and precautionary measures

  • Any expenses resulting from the enforced collection of tax debts will be borne by the taxpayer as the debtor.
  • Notice of enforced collection of tax debt will be provided to financial institutions for the purpose of restricting funds from being moved from the debtor’s bank accounts.
  • There are provisions concerning tax auctions, property seizures, and other tax collection enforcement measures.


Effective date

The organic tax code will be effective 30 days following the date of publication in the official gazette.


For more information, contact a tax professional with KPMG’s Latin America Markets Tax practice:

Alfonso A-Pallete | +1 (212) 954-3852 | apallete@kpmg.com

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

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