Income Tax Law
Decree No. 2.163 of December 29, 2015 was published in Official Gazette No. 6.210 Extraordinary of December 30, 2015. Through said Decree, the President of the Republic issued the Decree with the Status, Value, and Force of Law of Partial Amendment to the Decree with the Status, Value, and Force of Income Tax Law (the “Decree-Law”), which amended the Decree with the Status, Value, and Force of Income Tax Law (“IT”) published in Official Gazette No. 6.152 Extraordinary of November 18, 2014.
The Decree-Law includes the following significant changes:
1. The criterion of availability of the income was modified. The Decree-Law establishes that the income will be deemed to be available from the time when the transactions producing it are made, except in the case of credit assignments and discount transactions the proceeds of which are recoverable in several annual portions, in which cases the proportionally corresponding benefit will be deemed to be available to the assignee. It is also established and included that the income received by the persons indicated in the Decree-Law, deriving from the lease and sublease of real property, will be deemed to be available on the basis of the income received in the taxable fiscal year.
2. By virtue of the foregoing, the rule that established that the expenditures accrued and not paid, deducted by the taxpayer, had to be declared as income of the following year if payment was not made during the year when it was deducted, provided that the deductions involved were deductions prescribed in numbers 1, 2, 7, 10, 12, 13, 14, 15, 17, 18, 19, and 21 of article 27 of the IT Decree-Law, was deleted. Also, the Decree-Law deleted the rule that established that the amounts deducted according to number 4 of article 27 (labor indemnification), not paid within the year following that in which the worker ceased to provide services to the taxpayer because of the dissolution of the labor relationship, would be deemed as income of the fiscal year in which the said one-year period ended. In all of these rules deleted, the corresponding deduction was applied to expenses accrued and not paid in the same fiscal year; now, the deductions allowed will be those corresponding to expenditures accrued during the taxable year, when such deductions correspond to income available at the time when the transaction is made according to the new criterion on availability.
3. It was established that the net income deriving from banking, financial, insurance or reinsurance activities, obtained by legal persons or entities domiciled in the country will be levied with a proportional 40% tax.
4. Chapter I of Title IV referred to the tax rebates for new investments in industrial and agroindustrial, construction, electricity, telecommunications, technological activities, among others, was deleted, as well as the carry-forward for up to the 3 following fiscal years of the aforesaid rebates not offset.
5. The case established in article 58 of the repealed IT Decree-Law, related to the taxpayers’ right to request that the amount of the taxes withheld in excess be deducted from the calculation/payment of income tax corresponding to subsequent fiscal years was assigned a different place within Title III referred to Rates and their application and Proportional Encumbrance on another Income.
6. As to withholdings, it is established that the tax withholding is to be made when the payment or payment into account is made, whichever occurs first. Payment into account (abono en cuenta) will be understood as the amounts that debtors or payers enter in their accounting or records.
7. Regarding adjustment for inflation, it is established that the taxpayers categorized as special taxpayers by the Tax Administration are excluded from said system.
8. The temporary and final provisions establish that the Tax Administration, through an Administrative Ruling, will issue the rules that regulate the accounting adjustments to be made by the taxpayers excluded from the Adjustment-for-Inflation System. The estimated returns that are to be filed after the entry into force of this Decree-Law must take into account the net global income corresponding to the immediately preceding year, but excluding from the same the effect of the adjustment for inflation.
The Decree-Law became effective on the day following that on which it was published in the Official Gazette of the Bolivarian Republic of Venezuela.
In order to access the Decree-Law, please click here.