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Venezuela - Indirect Tax Guide

Venezuela - Indirect Tax Guide

Explore the requirements and rules that apply to Indirect Taxes in Venezuela.

Explore the requirements and rules that apply to Indirect Taxes in Venezuela.

Front view of mountain with fog Venezuela

General

Types of indirect taxes (VAT/GST and other indirect taxes).

VAT.

Are there other indirect taxes?

  • Municipal taxes.
  • Anti-drug tax.
  • Sport tax.
  • Science and technology tax.
  • Tax on large financial transactions.

What supplies are subject to VAT?

Value-added tax (VAT) is due on any supply of goods (except real estate goods) or services made in the country. Supply includes all forms of supply. It is not restricted to the provision of goods and services by way of sale but can apply equally to other forms of transaction.

For VAT purposes, the concept of taxable “sale” also includes the removal of movable property by the owner for his personal use or consumption (i.e. business gifts and private use of business assets) However, the removal of movable property to be incorporated as fixed assets or be consumed in the business line is not liable to VAT.

What are the standard or other rates (i.e. reduced rate) for VAT/GST and other indirect taxes?

Standard rate

  • VAT: 16 percent.
  • Municipal taxes are based on gross income. For activities performed within a country, the rates depend on the country and the type of income of the entity.
  • The anti-drug tax is paid annually based on operative accounting gain. The applicable rate is 1 percent.
  • The sport tax is paid annually based on net accounting gain. The applicable rate is 1 percent.
  • The science and technology tax is paid annually based on prior-year gross income. The applicable rate is 0.5 percent.
  • Tax on large financial transactions is 0.75 percent of each banking operation by taxpayers qualified by the SENIAT as ‘special liable subjects’ or taxpayers related to them.

Zero rate

  • Export of goods and services.
  • Sale of natural hydrocarbons performed by joint venture companies (empresas mixtas) to Petróleos de Venezuela S.A. or its subsidiaries.

Reduced rate

  • Certain goods and services (such as red meat, animal oil or domestic plane tickets) are temporarily subject to the rate of 8 percent until the budget law provides a different rate. This reduced rate allows the taxpayer to recover any VAT paid.

VAT/GST registration

Who is required to register for VAT/GST and other indirect taxes?

Venezuelan entities

Companies involved in sales of taxable services or goods in Venezuela are required to file VAT returns by using their fiscal registration number (RIF).

Foreign entities

Foreign entities are not required to charge VAT. In the cases of the import of goods and services, the buyer is responsible for VAT payment. The importer has to compute the VAT, pay it and then benefit from a VAT credit.

Is voluntary registration for VAT/GST and other indirect taxes possible for an overseas company (e.g. if annual turnover is below the relevant VAT/GST and other indirect taxes registration threshold)?

Not applicable as there is no specific registration for VAT purposes.

Are there any simplifications that could avoid the need for an overseas company to register for VAT?

Not applicable.

Does an overseas company need to appoint a fiscal representative?

No, since the buyer is responsible for the payment of VAT due on the import of goods and services.

Which forms and supporting documentation does an overseas company need to submit for VAT/GST and other indirect tax registrations?

Not applicable.

Is grouping* for VAT/GST and other indirect taxes possible?

No.

VAT/GST compliance

How frequently are VAT/GST and other indirect tax returns submitted?

Monthly.

What are the exchange rate rules in your country?

The country is under an exchange control regime. When the official exchange rate is modified, the VAT basis must be adjusted and credit or debit notes must be issued. The official exchange rate is DICOM and is published by the Banco Central de Venezuela.

International Supplies of Goods and Services

Exports – Goods

How are exports of goods treated?

Exports are subject to VAT at the 0 percent rate, with the exporter being allowed to recover any VAT paid in order to produce or buy the goods or services exported.

Exports – Services

How are exports of services treated for VAT/GST purposes?

Exports are subject to VAT at the 0 percent rate with the exporter being allowed to recover any VAT paid in order to produce or buy the services exported.

Imports – Goods

How are goods dealt with on importation?

When goods are imported into Venezuela, VAT and customs duties are due. They have to be paid or secured before the goods will be released from customs’ control. The VAT paid can be offset against the VAT charged by the acquirer on its VAT taxable operations, on its VAT return.

Imports – Services

How services which are brought in from abroad are treated for VAT purposes?

In case of continuing provided services, once the invoice is recorded in the accounting books, the VAT should be paid and can be offset against the VAT charged by the acquirer on its VAT taxable operations, on its VAT return. Additionally, the acquirer must issue an invoice as it is partly responsible for the VAT generated by the import of services.

VAT/GST recovery

Can an overseas company recover VAT/GST and other indirect taxes if not registered for VAT/GST locally?

No, only local taxpayers are allowed to recover VAT.

Are there any exemptions with the right to recover or deduct input VAT?

On local sales not subject to VAT, the taxpayer is not allowed to recover or deduct the input VAT.

Are there any restrictions to the deduction of input VAT?

VAT exemptions do not allow VAT recovery. The amount paid as VAT becomes part of expenses and cost. Non-VAT taxpayers are not able to recover VAT.

Tax points

When is VAT/GST due on a supply of goods or services?

A taxable activity will be deemed effected or fulfilled and the tax will be due as follows:

  1. In the sales of tangible movable goods: when the corresponding invoice or similar document evidencing the transaction has been issued or upon payment of the price involved or at the time of actual delivery of the goods, whichever should occur first.
  2. In the definitive import of moveable goods: at the time of registration of the corresponding customs declaration.
  3. In cases of power supply, telecommunications, street cleaning and waste-disposal services, or television transmission by cable or by any other technological means: at the time of issuance of the respective invoice or equivalent instrument by the party providing the service.
  4. In cases of services rendered on a continual and successive basis other than those mentioned in the case above: at the time of issuing the invoice or equivalent document by the servicing party or at the time of payment or when payment has become entirely or partially due.
  5. In cases of services lent to public entities: at the time of issuing the payment order.
  6. In considerations comprising services rendered from abroad, such as technological services, training and services subject to patents or governed by any separate special legislation and not covered by domestic administrative customs procedures: the tax will be considered due from the moment the beneficiary should receive the service.
  7. In all other cases not described above: the tax obligation will rise from the moment the servicing party has issued the invoice or equivalent document; or at the time the service is executed; or at the time of payment; or at the time payment becomes due; or at the time of delivery or availability to the acquirer of the item comprising the service, whatever should occur first.

Invoices

Is a business required to issue tax invoices?

Yes.

Is it possible/mandatory to issue invoices electronically?

Yes. Invoices and equivalent documents may be issued electronically in the following ways:

  • printing forms acquired from an authorized printer, or by using a tax computer or by using a hardware that cannot be accessed by anyone but the tax authorities
  • businesses in telecommunications, travel agents, insurance, courier cargo and courier, subscription television, electricity, domestic gas and internet industry are authorized to send electronic invoices.

Is it possible for the vendor to issue an invoice, (i.e. self-billing)?

No.

Record Keeping Requirements

How long must records and invoices be retained?

Records and invoices must be kept for 10 years.

Can the invoices be stored abroad?

There are no limitations related to this matter. However, the legal books/records of the company must be maintained where the company is fiscally domiciled. If invoices are required on a tax inspection, they must be available.

Audits

Do tax audits take place on a regular basis?

VAT audits take place often, typically more than once a year.

Are audits done electronically in your country (e-audit)? If so, what system is in use?

No.

What penalties can arise from non-compliance?

Those who, by either action or omission, cause an illegal diminution of the tributary income — including the illegal benefit of exemptions, fiscal exonerations or other benefits — will be sanctioned with a fine of 100 to 300 percent of the omitted tax.

Also, in cases of non-compliance with formal duties, the company could be closed for 10 business days.

Special Indirect tax rules

Are there any special rules for the sale of a company by one taxpayer to another where VAT is not due on the sale?

No, even in cases of liquidation, VAT would be applied on the assets returned to shareholders. The only case not subject to VAT is the contribution of assets to a new entity that will carry on the same type of business.

Are there unique specific indirect tax rules that you would not expect to find in ‘standard’ VAT jurisdictions?

No, in general terms, VAT legislation in Venezuela has no specific rules other than specified above. Financial institutions (banks) charge VAT only on leasing operations (not very common in Venezuela). As a unique rule, special taxpayers are required to withhold 75 percent of the VAT invoiced to them.

Does a reverse-charge mechanism apply for goods or services?

Yes.

Are there indirect tax incentives available (e.g. reduced rates, tax holidays)?

Certain tax exemptions or relief apply according to the VAT law. Zero and reduced rates apply as explained above.

Rulings

Are rulings and decisions issued by the tax authorities publicly available?

Yes, they can be found at www.seniat.gov.ve.

For further information please contact

Alejandro Rangel
Partner
KPMG in Venezuela
T: +582 12 277 8971
E: alejandrorangel@kpmg.com

Footnote

*By ‘grouping’ we mean: either a consolidation mechanism between taxpayers belonging to the same group (payment and refund are compensated but taxpayers remain distinct) or a fiscal unity for VAT/GST purposes (several taxpayers are regarded as a single taxpayer).

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