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Constitutional Law of the Tax Regime for Sovereign Development of the Arco Minero

The Constitutional Law of the Tax Regime for the Sovereign Development of the Arco Minero (the “Law”), issued by the National Constituent Assembly, was published in Official Gazette No. 41.310 of December 29, 2017. The Law created a special tax regime applicable to the net income of territorial source obtained from the sale of gold to the Venezuelan Central Bank (“VCB”) or to the persons/entities authorized by it according to article 31 of the Decree with the Status, Value, and Force of Organic Law that Reserves to the State the Activities of Exploration and Exploitation of Gold and other Strategic Minerals (the “Decree”), extracted at the National Strategic Development Zone “Arco Minero del Orinoco”, by the persons/entities indicated in article 1 of the Law.

 

The annual net income of territorial source obtained by the Strategic Alliances formed between the Republic and production units, socioproductive organizations, partnerships, and other forms of association permitted by the law, which will be oriented to the activity of small mining, duly registered with the Single Mining Registry (Registro Único Minero), will be taxed on the basis of the rate fixed by  the President of the Republic, when their production capacity is lower than 1,600 kilograms per year  or their processing capacity is lower than 250,000 tons per year, duly certified by the Ministry of the Popular Power with competence over mining matters.

 

The annual net income of territorial source obtained by public institutes, corporations or companies exclusively owned by them or affiliates of such companies the corporate capital of which is fully owned by the Republic and that have been created for such purpose; the companies with an interest of the foregoing companies and the VCB in their capital in the terms established in the Decree (which entities must also meet a group of conditions established in article 5 of the Law); as well as the mixed companies in which the Republic has an interest not lower than 55% of the corporate capital will be taxed on the basis of what the President of the Republic determines and under the following assumptions:

 

a) When their production capacity is higher than or equal to 16,000 kilograms of gold per year or their processing capacity is higher than or equal to 2,5000,000 tons per year, duly certified.

 

b) When their production capacity is lower than 16,000 kilograms of gold per year, but higher than or equal to 1,600 kilograms of gold per year or their processing capacity is lower than 2,5000,000 tons per year, but higher than or equal to 250,000 tons per year, duly certified.

 

The income tax resulting from the sale of gold abroad, authorized by the VCB, will be determined and paid in foreign currency or its equivalent in gold. The Tax Administration will establish a regime of advance payment of the tax. 

 

This special tax regime will be applied to the fiscal years that are ongoing at the time when the Law becomes effective. 

 

The Law became effective upon its publication in the Official Gazette of the Bolivarian Republic of Venezuela.

 

In order to access the 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.”