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Value Added Tax Law

Decree No. 1.436 of November 17, 2014 was published in Official Gazette Extraordinary No. 6.152 of November 18, 2014. Through said Decree, the President of the Republic issued the Decree with the Status, Value, and Force of Law of Amendment to the Law that establishes the Value Added Tax (the “Decree-Law”), published in Official Gazette No. 38,632  of February 26, 2007.

 

Following are some of the most significant changes included in the Decree Law:

 

  1. The general tax rate applicable to the relevant taxable base may be modified by the National Executive and will range between a minimum limit of 8% and a maximum limit of 16.5%. The National Executive may establish different rates for specific goods and services, but they may not exceed the limits indicated.

  2. An additional rate will be applied, which may be modified by the National Executive, and will range between a minimum limit of 15% and a maximum limit of 20% of the luxury goods and provision of luxury services described in the Decree-Law.

  3. The activities defined as taxable events of the Value Added Tax (“VAT”) that generate fiscal debits or that are subject to a zero tax rate will be entitled to the deduction of the fiscal credits borne by the ordinary taxpayers by reason of the acquisition or importation of corporeal personal property or services, always provided that: (i) they correspond to costs, expenses, or expenditures inherent in the usual economic activity of the ordinary taxpayer, (ii) they do not exceed the tax that was legally applicable, and (iii) they are supported by returns, calculations made by the Customs and Tax Administration or by documents that meet the minimum requirements established in the Decree-Law.

  4. The right to deduct the fiscal credit may not be exercised after the elapsing of twelve (12) tax periods after the date of issue of the corresponding invoice or debit note, the date of the customs declaration or the date of the voucher of payment of the tax in cases of receipt of services from abroad.

  5. Fiscal credits will not be deductible when they are: (i) included in invoices and other documents that are false or unreliable or are granted by persons/entities that are not ordinary taxpayers, (ii) not directly and exclusively related to the entrepreneurial or professional activity of the ordinary taxpayer, and (iii) borne by reason of the receipt of services of food and beverages, alcoholic drinks, and public performances.

  6. For purposes of the preceding number, the fiscal credits arising from the acquisition of the following goods will not be deemed to be directly and exclusively related to the entrepreneurial or professional activity of the ordinary taxpayer: (i) goods customarily used for said activity and at the same time for others of a non-entrepreneurial or non-professional nature in alternate periods, (ii) goods or services simultaneously used for entrepreneurial or professional activities and for private needs, (iii) goods or fees not included in the accounting of the entrepreneurial or professional activity of the ordinary taxpayer, and (iv) goods intended to be used in the satisfaction of personal or particular needs of the entrepreneurs or professionals, their relatives or the personnel subordinated to them.

  7. The Tax Administration will issue provisions establishing the requirements, formalities, and specifications that the invoices and other documents have to meet according to the Decree-Law. Said provisions must establish the mandatory nature of electronic invoicing and allow the issue of documents through non-electronic means only if technological limitations exist.

  8. The obligation to issue invoices with a single and consecutive numeration per establishment or branch, imposed on the taxpayers that develop activities in more than one establishment or branch, was removed. The requirement of keeping the same control number for printed documents (originals and copies) was also removed. In addition, the withholding agents’ obligation to use a numeration different from the one used to issue the documents inherent in their activities was removed.

  9. The sales, transactions equated with sales, importation, and provision of services, customary or not, of the luxury goods and provision of luxury services specified in the Decree-Law will be applied an additional 15% tax rate.

  10. The general tax rate applicable to the taxed transactions will be 12% up to the time when a different rate is established by the National Executive according to the Decree-Law.

 

The Decree-Law became effective on and must be applied as from December 1, 2014.

 

In order to access the Decree-Law, please click here.

 

“NOTE: THIS INFORMATION SHOULD NOT BE CONSTRUED AS LEGAL ADVICE ON ANY SPECIFIC MATTER AND ITS CONTENT ARE INTENDED AS A MANAGEMENT ALERT AS TO CURRENT DEVELOPMENTS IN VENEZUELA, ANY SPECIFIC LEGAL QUESTIONS REGARDING THE POSSIBLE APPLICATION OF NEW OR PROPOSED LEGISLATION TO PARTICULAR SITUATIONS SHOULD BE ADDRESSED TO TRAVIESO EVANS ARRIA RENGEL & PAZ.