IT PAYMENT EXEMPTION DECREE – PRIMARY EXPLOITATION OF AGRICULTURAL ACTIVITIES
Decree No. 3.920 of July 19, 2019, issued by the President of the Republic, was published in Official Gazette No. 41.678 of July 19, 2019 (the “Decree”). The Decree establishes an exemption from Income Tax (“IT”) for the net income from Venezuelan source deriving from the primary exploitation of agricultural activities, in the vegetable, livestock, forest, fishery, and aquaculture sub-sectors of the persons who are registered as beneficiaries at the Office of Statistics and Economic, Customs, and Tax Studies (Oficina de Estadística y Estudios Económicos Aduaneros y Tributarios) of the National Integrated Service of Customs and Tax Administration (Servicio Nacional Integrado de Administración
Aduanera y Tributaria – SENIAT).
The Decree establishes that primary exploitation will be understood as the simple production of fruits, products or commodities obtained from nature, provided that they are not subject to any process of transformation or industrialization. The processes listed in article 2 of the Decree will be considered to be included in the primary agricultural activity.
The exploitation will be considered as primary exploitation when: a) it relates to agricultural activities, in the vegetable, livestock, forest, fishery, and aquaculture sub-sectors; b) in the case of fishing activities, they are performed in vessels, ships, or boats registered in the country; c) those seeking to benefit from the exemption directly carry out the exploitation and are also owners of the production unit or have been authorized in writing by the owners for the performance of said activities, with no profit for the person/entity granting the authorization; or have been the beneficiaries of a regularization of the same, according to the Law of Lands and Agrarian Development. In the case of outsourcing, the exemption will not be applicable to the holder of the property right or the regularization.
The exemption will be subject to the beneficiary’s compliance with the conditions established in article 5 of the Decree, which include to allocate 100% of the amount of the tax that would have had to be paid to direct investments in the areas of scientific or technological research and development, improvement of the productivity indexes; to file an annual affidavit on the investments made and amount of the exempt tax invested in each fiscal year ended, as well as on the investments to be made and the amount of the tax to be invested in the following fiscal year; among other conditions.
In the cases in which the beneficiary carries out activities taxed with IT and exempt from it under the Decree, the common deductions and costs applicable to the income generated by said earnings will be proportionally distributed. The loss resulting from the exempt activity may not be imputed in any fiscal year to the earnings resulting from the activity taxed with IT.
The beneficiaries of the exemption must perform the other formal duties required under the IT Law.
Within 30 days following the publication of the Decree, each beneficiary of the exemption regime must file with the Ministries of the Popular Power for Productive Agriculture and Lands; for Fishery and Aquaculture; or for Urban Agriculture, as the case may be, and with the Office of Statistics and Economic, Customs, and Tax Studies of SENIAT an affidavit indicating in detail the investments made and the amounts invested during fiscal year 2019, as well as the investment plan of the tax exempt for fiscal year 2019. The same obligation will be applied, as appropriate, to the next economic years.
The aforesaid exemption will be in force from January 1, 2019 to December 31, 2023.
In order to access the Decree, please click here.
Should you have any question or comment or require further information, please contact the partner in charge of your account via-email.