VAT payment exemption and application of 2% or 0% ad valorem rate to certain goods
Decree No. 3.446 of June 1, 2018, issued by the President of the Republic, was published in Official Gazette No. 6.379 Extraordinary of June 1, 2018 (the “Decree”). According to said Decree, the final importation of the following assets will be exempt from payment of Value Added Tax (“VAT”) and the 2% or 0% ad valorem rate will be applied to them, as appropriate: movable capital assets, information technology and telecommunications assets, their parts, pieces, and accessories not produced or with insufficient production in the country, of first use, identified as BK or BIT, in columns three (3), four (4), five (5) or six (6) of article 40 of the Schedule of Customs Duties, in the terms and conditions prescribed in the Decree and according to articles 10, 11, and 12 of the Schedule of Customs Duties. The aforementioned assets are indicated in article 1 of the Decree.
Likewise, the final importation of tangible goods intended for the manufacturing and/or construction industry, installed or to be installed in the national territory, and indicated in article 2 of the Decree, are exempt from the payment of VAT.
The natural or legal persons must request the issue of a Certificate from the Ministry of the Popular Power for Economy and Finance “(MPPEF”), in order to obtain the aforesaid exemption benefit. The request must indicate: a) the absence of production or insufficient national production of the assets classified under the tariff items sought to be imported; b) that the asset concerned corresponds to the assets indicated in the Decree; c) that the use and intended purpose of such assets is in agreement with the objectives of development of the country; and d) that the assets concerned are adapted to the economic activity of the company. The request must also contain the information indicated in article 4 of the Decree. The MPPEF will evaluate such request and issue a decision within the following 20 business days.
In the cases in which the acquisition of the assets is made through intermediaries, the requirements established in article 5 of the Decree must be met, in order for the benefits resulting from the same to be directly used by the end users of said assets.
The Customs Office of Entry must keep a record of the exempted transactions, identifying the date of the importation, the import registry number, the CIF value of the imported assets, the amount of exempted VAT, among others.
The periodic evaluation of this exemption according to article 65 of the VAT Law will take into account the following variables on a concurrent basis: a) compliance with the social responsibility commitments, with a 30% weighting index; b) result of the incorporation of the asset, with a 20% weighting index; c) new technology incorporated, with a 10% weighting index; d) compliance with the planning of installation of the asset, with a 40% weighting index.
The maximum period of duration of the exemption benefit established in the Decree will be 3 years as from the entry into force of the Decree.
Finally, Petróleos de Venezuela, S.A. (“PDVSA”) and its affiliates are exempt from VAT payment, in the terms and conditions established by the National Executive, for the final importation of the products intended for the oil industry, installed or to be installed, in the national territory, and indicated in article 15 of the Decree. The maximum period of duration of the exemption benefit will be 1 year as from the entry into force of this Decree.
PDVSA and its affiliates will identify the raw materials required by the companies with capacity of national production of the products indicated in article 15 of the Decree and will establish the importation strategies of said raw materials as from September 2018, in coordination with the companies that produce said products. The final importation of the raw materials identified will be benefited by the VAT payment exemption, with a validity of 3 years as from the entry into force of the Decree.
The Decree entered into force upon publication of the same in the Official Gazette of the Bolivarian Republic of Venezuela.
In order to access the Decree, 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.”