Resident individuals are liable for income tax (impuesto sobre la renta) at progressive rates on their net Venezuelan income. Nonresident individuals are taxed by withholdings at fixed rates on Venezuelan income, including remuneration from employment and income from services rendered in Venezuela.

Individuals are classified as resident for income tax purposes if they remain in the country for more than 180 days in aggregate in the tax year. Those present for 180 days or fewer in aggregate are nonresident. Individuals present for more than 180 days in the previous tax year are resident in the current tax year no matter what the length of their stay in the current tax year. Foreigners classified as resident are taxed on the same basis as resident Venezuelan citizens.

TREATMENT OF FAMILIES

Spouses who are regarded as jointly owning their property are, as a rule, treated as a single taxpayer, but a married woman may declare separately income from employment or from the exercise of a noncommercial profession. Separate returns must be filed if, in law, the property of spouses is regarded as separately owned. Parents must file tax returns for their children if the children are in receipt of taxable income.

INDIVIDUAL INCOME TAX RATES

The progressive income tax rates applying to resident individuals are set out in Table B. The tax rates applying to nonresidents are set out in Table C. Tax is charged by withholdings at source. Fees for technical assistance and technological services are chargeable in the same way as for companies (see "TAXATION OF NON RESIDENT ENTITIES"). The rates shown in Table C are the effective rates applied to gross income.

TABLE B INDIVIDUAL INCOME TAX RATES - RESIDENTS

Band of Taxable Income     Rate of Tax on Band     Cumulative Tax on
         (Bs)                      (%)           Upper Limit of Band 
                                                        (Bs)

0-  1,700,000              6                     102,000
1,700,001-  2,550,000      9                     178,500
2,550,001-  3,400,000      12                    280,500
3,400,001-  4,250,000      16                    416,500
4,250,001-  5,100,000      20                    586,500
5,100,001-  6,800,000      24                    994,500
6,800,001-10,200,000       29                    1,980,500
Over 10,200,000            34                    -

TABLE C INDIVIDUAL INCOME TAX RATES - NONRESIDENTS

Type of Income                                    Effective Rate (%)

Remuneration (salaries, wages, bonuses, and
so forth)                                         34

Professional services                             30.6
Technical assistance and technological            10.2
services 

Other types                                       34

TAXABLE INCOME

The taxable income of residents is computed by subtracting allowable deductions from gross income.

Employment Income

Taxable employment income includes salaries, wages, and any other remuneration for personal services, including subsistence payments and profit-sharing entitlements, but not reimbursements of travel and representation expenses and statutory termination indemnities.

Self-Employment Income

In arriving at business income, resident individuals can deduct costs and expenses according to rules that follow those for companies.

Investment Income

Dividend income is not taxable in Venezuela. Interest and royalties are taxable when paid, although interest from savings deposits and savings bonds is exempt.

Foreign-Source Income

Subject to the rules regarding fees for technical assistance and technological services, foreign-source income is not taxable in Venezuela, and there are no foreign tax credits.

Capital Gains

Capital gains are taxed as ordinary income. Business gains are included in the computation of business income. Other gains, such as those derived from sales of shares or securities, are charged separately. Gains on selling a private residence are exempt, provided that a number of conditions are met.

Exempt Income

Exempt income includes pensions for retirement and disability, gifts, inheritances, and legacies.

DEDUCTIONS AND RELIEFS

In arriving at net taxable income, a resident can deduct the following expenses:

  • Interest on loans obtained to purchase or enlarge the home or rental payments on the home. This deduction is limited to 5,000 tax units.
  • Educational expenditure incurred for the benefit of the individual or dependent children age twenty-five or under.
  • Premiums paid to Venezuelan companies for life and hospitalization insurance.

Medical, dental, and hospitalization fees incurred within the country for the benefit of the individual, dependents, and so forth.

The individual may opt for a standard deduction of Bs 1,275,000 or 750 tax units. Residents are also entitled to personal tax credits of ten tax units for themselves and ten tax units for a spouse and each child.

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".