WHOLESALE AND LUXURY ITEMS TAX

A wholesale and luxury items tax (impuesto al consumo suntuario y a las ventas al mayor), similar to a value added tax applies, but only among corporations. The standard rate is currently 12.5%. A proposal has been made to raise the tax to 16.5% and to apply an additional 30% tax to luxury items. If the proposal is enacted, it will be effective from 1 June 1996.

A business receives a credit for tax paid on its purchases of goods, chattel, and imports; it gets a debit against tax on sales. If debits exceed credits in a month, the excess may be carried forward as a credit to the following months.

Exports are taxed at a rate of 0%. Exporters that are regular taxpayers are entitled to recover the tax they paid at a pro rata basis by requesting reimbursement, using tax paid to pay income taxes, or assigning tax credits to another taxpayer. Such reimbursement would be made by means of a tax certificate provided by the tax administration.

It is expected that small producers and businesses whose sales of goods and services are below 12,000 tax units in a calendar year will be exempt from VAT. Additionally, the following items may be exempt: foodstuffs based on agricultural or meat products; medicines for human consumption; hydrocarbons and their derivatives; educational services; capital market transactions; imports subject to special customs regimes; financial, savings, credit, and foreign currency transactions; and local transportation of passengers.

The luxury items tax considers certain goods, chattels, and services subject to an additional tax rate of 10% or 20% depending on the item. Among luxury items are cable television subscriptions, gambling machines activated by coins and tokens, luxury automobiles and yachts, parabolic antennae, jewels, and motorcycles. This tax also applies to ultimate consumers.

GENERAL TAX ON CORPORATE ASSETS

The general tax on corporate assets (impuesto general a los activos empresariales) is levied on tangible and intangible assets held by individuals carrying out commercial activities and corporations and serves as a minimum income tax. The tax can be applied against or credited to the income tax liability. The taxpayer must pay the higher of either the income tax liability or the assets tax.

The rate of assets tax is 1% of the net yearly average amount (adjusted for inflation) of assets held by the taxpayer. There may be exemptions from assets tax for corporations engaged in public services whose billing rates are regulated by the government (50% exemption) and corporations engaged in public transportation for a period of three years from the law's effective date; corporations that have not begun operations; nonprofit entities; and agricultural activities. An exemption is also being considered for investments in stocks.

SOCIAL SECURITY CONTRIBUTIONS

Contributions for social security (contribuciones al seguro social) are levied on both employers and employees. Employers contribute at rates varying between 11% and 13% of the employee's salary, and employees contribute at 4%. Both employer and employee contributions are subject to an upper limit on the salary base.

Employers and employees must pay further contributions for unemployment insurance (contribuciones al seguro de paro forzoso). Employers contribute at the rate of 1.7% of the employee's salary and employees at the rate of 0.5%, subject to limitations.

National housing policy contributions (contribuciones por politica habitacional) are also payable. Employers pay 2% of basic monthly salaries, and employees 1% of basic monthly salaries.

Commercial and industrial concerns and their employees must contribute to a national apprenticeship program. Employers pay 2% of wages and salaries; employees contribute 0.5% of their profit-sharing bonus for the year.

MUNICIPAL TAXES

Of the two municipal taxes, the municipal business license fee (impuesto municipal) is more important. Industrial and commercial companies must obtain an annual license in order to operate. The fees payable are, in effect, local taxes. They are charged on turnover at rates that vary according to the location of the business and the nature of its activities.

The real estate ownership tax (catastro) is based on the value of the property owned, as assessed by the authority concerned. The tax generally amounts to about 0.1% of assessed value each year, although the tax is not usually payable until the property is sold.

GIFT AND INHERITANCE TAX

Gift and inheritance tax (impuesto sobre donaciones y sucesiones) is payable by a donor or the estate of a deceased person, as the case may be, on transfers of assets located in Venezuela, irrespective of the nationality or residence status of the donor or deceased person. Transfers of assets located abroad are also taxable if the transferor was resident in Venezuela when the gift was made or at the date of death. Residence is the same as for income tax purposes. The rates range from 1% to 55%, depending on the relationship of the recipient to the deceased person or donor, and are based on the value of the assets passing.

CUSTOMS DUTIES

As a member of the Andean Pact, Venezuela has recently adopted a common scale of customs tariffs. The few exceptions among the subscriber countries or in the preferential system would be gradually eliminated during a limited adaptation period for some specifically protected economy sectors.

The customs law provides special regimes for temporary admission status for goods and general merchandise in transit within Venezuela to be used in manufacturing activities in another country.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

For further information contact Deirdre Silberstein, Washington, on +1 202 955 4000 or enter a text search "Deloitte & Touche" and "Business Monitor".