Withholdings in Venezuela are tax advances and thus constitute tax credits applicable to the final tax due at the time of filing a tax return.

DIVIDENDS

No taxes are levied on dividends in Venezuela, whether paid to residents or nonresidents.

INTEREST

Payers of interest must deduct withholding tax at 4.95% from interest paid to foreign financial institutions. Interest paid to nonresident companies other than financial institutions is subject to a withholding tax rate of 32.3% (34% of 95%). This rate also applies to nonresident individuals. Payments made by resident corporations, banks, and insurance companies to resident corporations are subject to withholding at a rate of 5%.

ROYALTIES

The maximum effective rate is 30.6% (34% of 90%) when the recipient is a nonresident company or individual. No withholding tax is levied on royalties paid to resident companies and resident individuals.

OTHER PAYMENTS

Rent paid to residents is subject to withholding; the rates are 5% for entities and 3% for individuals. Rent paid to nonresidents is also subject to withholding tax, the rate being 5% for corporate recipients; for individuals, the rate is 20% for both real estate and chattel. Progress payments made under construction and other contracts are subject to withholding, the rate being 2% for corporate recipients; for individuals, the rates are 20% for nonresidents and 1% for residents.

Nonresident individuals receiving fees for technical assistance and technological services are generally subject to withholdings at 34% of 30% of the amount payable. Resident individuals are not subject to income tax withholding. The rates generally applying to nonresident recipients are described in "TAXATION OF NONRESIDENT ENTITIES" and "TAXATION OF INDIVIDUALS". Employment income is subject to withholdings on the basis of the rates set out in Tables B and C

RATES UNDER DOUBLE TAX TREATIES

Venezuela has concluded general treaties for the relief of double taxation with France and Italy, which would reduce the rates described above. A comprehensive treaty is currently awaiting ratification with Barbados, Germany, the Netherlands, Portugal, and Switzerland and comprehensive treaties are under negotiation with Belgium, Malaysia, Poland, Sweden, and the United Kingdom.

Treaties dealing with the taxation of profits from air transportation have been concluded with Argentina, Brazil, Portugal, Switzerland, and Trinidad and Tobago. Agreements covering both air and sea transportation have been concluded with Colombia, France, Germany, Italy, the Netherlands, Spain, the United Kingdom, and the United States.

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.

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