Taxation of international executives
Are there social security/social insurance taxes in Venezuela? If so, what are the rates for employers and employees?
Foreigners who reside and work in Venezuela are subject to the mandatory Venezuelan Social Security. The Social Security Contribution is withheld from the monthly salary, based on a ceiling of VEF 887.537,2 per month (5 monthly minimum salaries, minimum salary was VEF 177.507,44 for December 2017), which currently vary several times a year.
Non-resident foreigners working under dependent relationship in Venezuela are likely to be subject to the social security withholdings.
Social security benefits take the form of comprehensive assistance and monetary payments, under the provisions of the Social Law and its regulations. That Law covers social security protection for beneficiaries in cases of maternity, old age, survivorship, sickness, accident, disability, death, retirement, dismissal, and unemployment.
This benefit extends to all employees insured by the Venezuelan Social Security Institute (IVSS) who lose their jobs and are able and willing to work.
Employers and employees must make monthly contributions to the unemployment compensation fund, based on the following percentages applied on a maximum ceiling of VEF 1.775.074,4 per month (10 monthly minimum salaries), which currently vary several times a year.
Are there any gift, wealth, estate, and/or inheritance taxes in Venezuela?
In Venezuela, taxes are imposed on the transmission of property to beneficiaries domiciled in Venezuela or to non-residents in respect of property located in Venezuela. Each taxable beneficiary must compute and pay tax on his/her inheritance or gift. Rates vary, depending on the amount of the inheritance or gift and on the degree of family relationship to the decedent or donor, from 1 percent to 55 percent.
Are there real estate taxes in Venezuela?
Real Estate taxes are imposed by the autonomous municipality on which the property is located. These taxes are paid by the owner; the rates vary depending on the Municipality based on market values, generally from 1/1,000 to 5/1,000.
Are there sales and/or value-added taxes in Venezuela?
Value-added tax (VAT) is applicable to economic agents. The tax is levied at 12 percent. The following categories of taxpayers are subject to VAT:
The following taxpayers are not subject to VAT:
The obligation to pay VAT arises from the following activities:
These activities are taxable as follows:
See unemployment compensation in the social security section.
Are there additional taxes1 in Venezuela that may be relevant to the general assignee? For example, customs tax, excise tax, stamp tax, and so on.
The housing policy law is a legal tool by which the government seeks to meet the housing needs of Venezuelan Families, and particularly those of lower-income families. All Venezuelans, foreigners actively contributing, which their monthly salary is lower than 150 tax units, are potential beneficiaries.
Employers and employees are required to pay contributions to the Housing Policy Fund, during the first five business days of every month, based on the following percentages of each employee’s monthly salary. Although it is not clear from doubt, it is possible to interpret the taxable base for this tax should be capped at the normal salary.
Within the first five days of each quarter, the employer must deposit the equivalent of 2 percent of the total amount of wages, salaries and compensation of any other kind paid to persons who work in industrial or commercial establishments not owned by the Nation, the States or the Municipalities. Employers are also required to withhold 0.5 percent of annual profit sharing payments to workers for this purpose.
Currently, there are no state taxes imposed on the income of individuals in Venezuela.
The Law requires that at least 90 percent of white and blue-collar employees (calculated separately) have to be Venezuelan citizens. Moreover, no more than 20 percent of the salaries and other compensation paid to each group can be earned by foreigners, although the Labor Government Office in special cases can modify this percentage. Certain occupations, including those of commanding airplanes or ships can only be practiced by Venezuelans.
Fiscal information register3
All individuals engaged in economic activities in Venezuela must make a registration with the Fiscal Information Registry (RIF), within the first 25 days of doing business in Venezuela. This registration must be updated every three years.
For the 2017 tax year, individuals that earned in the previous year more than VEF 2.250.000,00 (7,500 tax units); are to be considered special taxpayers subject to a severe control compliance and closer review process from the tax authorities.
This Law is aimed at ruling issues relating to the entrance, permanence, registration and control of foreigners in the territory of the Republic, as well as their rights and obligations. Provisions set forth in this Law will be applicable to foreigners in the national territory regardless of their migratory condition, except for diplomatic representatives, without prejudice to provisions set forth in International Law standards and integration treaties and agreements subscribed and ratified by the Republic.
The Law establishes different categories of foreigners for which the regulation –that shall be dictated within the 60 days following the publication of this legal text- will establish the requirements and procedures relating to their entrance, permanence, departure and re-entrance to the national territory. For the moment, the sole indispensable requirements referred to in the regulation are valid passports and visa, where applicable.
Categories referred to in the Law are as follows.
Likewise, the Law provides for a number of reasons for non-admission of foreigners in the national territory.
The new law clearly states as well that those places enabled for access by foreigners may be closed only in case of emergencies or proven need, temporarily and through sufficiently motivated acts considering both the facts and the related law, dictated in conformity with special standards on exception situations.
Additionally, a series of duties are established for foreigners, including the obligation of registration with the National Registry of Foreigners within the 30 days following their arrival if entering the Republic’s territory as temporary migrants or falling under the category of permanent migrant.
The right to the effective judicial custody in acts concerning foreigners, as to their condition as such, may be considered as a novelty as to its express establishment.
Those persons required to enter the Republic’s territory under a labor contract shall obtain a labor authorization from the Ministry of Work. The procedure to obtain the corresponding authorization shall be performed by the foreigner through his/her contractor in the national territory. The following persons are exempted from this obligation.
The visa authorizing the permanence of the foreigners in the Republic’s territory shall be valid for the same duration period of the labor authorization, and may be renewed provided that the same circumstances giving rise to the granting of the visa will prevail.
The new set of standards establish that employers hiring foreigners shall request their identification documents and notify in writing to a National Registry of Foreigners, created by the law as well, the terms and conditions of the labor relationship as well as the termination of such relationship within the 30 days following the respective event. Likewise, the owners or administrators of hotels and transportation companies shall submit to the aforementioned Registry data on their foreign customers every eight days.
Employers or contractors of foreign workers shall assume a commitment with the relevant authority to pay for the return ticket of the foreigner and his/her family back to their country of origin or last residence within the month following the termination of the contract.
In the event of non-compliance with obligations set forth in this Law, the relevant ministry on foreigners and migration-related matters will be empowered to dictate the necessary measures of warning, fines or deportation from the territory. The right of those subject to the measure of deportation to receive salaries, severance indemnities and all of benefits set forth in the laws governing the labor relationships and collective contracts as well as other social laws is exempted.
Penalties and sanctions-related standards establish, among others, the following.
1Additional tax information is summarized by Alcaraz Cabrera Vázquez, the Venezuelan member firm of KPMG International, based on the Social Security, Housing Policy and the National Institute of Educational Cooperation Laws and its corresponding Regulations.
2Article 27 of the Venezuelan Organic Labour Law (Official Gazette No.5.152 dated 19 June 1997).
3Article 99 of the Venezuelan Income Tax Law (Official Gazette No.5.566 dated 28 December 2001).
4Special taxpayers Providence No.296, Official Gazette No.37.970 dated 30 June 2004.
5Immigration Law, Official Gazette No.37.944 dated 24 May 2004 (no web site available).
© 2021 Ostos, Velázquez & Asociados, RIF: J-00256910-7. KPMG Escritorio Jurídico, RIF: J-30435724-9, sociedad civil venezolana de personas y miembro de la organización global de firmas miembro independientes de KPMG, afiliadas a KPMG International Limited, una compañía inglesa limitada por garantía. Todos los derechos reservados.
Para más detalles sobre la estructura organizacional de KPMG a nivel global, ingresa a https://home.kpmg/governance.