7 Venezuela

Mr. Winston Perez

I.1 Corporate Income Tax at Domestic level

The Venezuelan Constitution provides for a tax system based on a fair distribution of tax, levied according to the economic capacity of the taxpayer, the principle of progressive rates, the protection of the national economy, and the upgrade of the living standard of Venezuelan citizens.

I.1.1. Active Income

I.1.1.1. Business Profits
Availability of Income

In general terms, most items will be taxed on an accrual basis. However, the Venezuelan Income Tax Law (from herein VITL) provides three exceptions to this general rule: (a) in case of credit assignments and discount operations whose product recovers in various annuities, income is considered available for the assignee in proportion to the corresponding benefit; (b) income from loans granted by banks, insurance companies and other credit institutions and from lease and sublease of movable and immovable property is considered available when accrued in a specific fiscal year; and (c) income from work under dependency relation and from gambling is considered available when paid.


Constituted by the total amount of the sales of goods and services, leasing and any other regular or sporadic activities such as those arising from work performed under an employment relationship or from the practice of non-mercantile professions, as well as those derived from royalties or similar shares, except where otherwise established by the Law.

Gross Profits

Determined by deducting the cost of the products transferred and services rendered in the country from the revenue, unless the nature of the activity thereof requires the application of different procedures.

Gross profits derived from foreign source will be determined by subtracting from their revenues the foreign costs imputable to same. Costs and common deductions applicable to revenues of territorial or extraterritorial source will be proportionally distributed to the respective revenues.

The law stipulates that acquisition costs of those goods which are to be resold or transformed in the country, customary commissions charged for procedures associated with the acquisition of goods, as well as transport and insurance are deemed incurred in the country. These costs should be invoiced at values which may not exceed the fair market value.

I. Taxable Event

For Venezuelan Corporate Income Tax purposes the taxable event would be earnings obtained in or outside the country at the end of the fiscal year. Thus, tax is levy on a current year basis. The tax year adopted is generally that specified in a company’s statutory documents with the standard year being a calendar year. However, it should be noted that other periods are also allowed. The tax is payable when filing the final corporate tax return, required within three months of the end of the fiscal year.

I. Taxable Basis

The tax is levy on net earnings; which means, equity increases resulting after subtracting costs and deductions allowed by the Law from gross income, as the case may be, from the aggregate net earnings and then, the corresponding progressive tariff is applied. Taxpayers not designated as “Special” by the Venezuelan National Tax Agency” (SENIAT) or that do not engage in baking, financial, insurance or reinsurance activities must add or subtract the result from inflation adjustment before applying the tariff.


For the determination of net global earnings, the VITL establishes certain expenses and conditions that must be complied with for deductibility purposes.

Net income is determined by subtracting from the gross profits certain deductions that must correspond to disbursements not imputable to the cost, and which must be customary, incurred in the country and necessary for the production of income.

Customary and necessary expenses incurred in Venezuela associated with the export of goods produced in the country or services rendered abroad are also deductible.

Normal and necessary expenses incurred abroad or incurred in Venezuela relating to revenues from abroad will be distributed in a manner proportional to the respective revenues.

Among the most important expenses are the following:

  1. Salaries of personnel: Salaries paid to both domestic and foreign employees are deductible. Deductions for salaries paid to directors, managers and administrators are limited to a maximum 15% of gross income. Likewise, the Tax Administration is entitled to reject payments associated with salaries and other concepts related to any excess in the percentage stipulated in the Venezuelan Labor Law (20%), for payroll of expatriate personnel.
  2. Paid Taxes: The VITL allows for deduction of taxes which have been effectively paid in connection with the production of income, such as municipal business tax, tax on urban property, social contributions, etc.
  3. Amortization and depreciation: Expenses arising from depreciation of fixed assets and amortization of the cost of other elements invested in the production of income are deductible, provided that such goods are located in the country. Only real properties invested as fixed assets and those leased to employees may be deducted. Generally, the straight-line and the unit-of-production depreciation methods are acceptable for tax purposes. SENIAT may authorize any generally accepted method of depreciation; however, a change in method requires prior authorization. No official depreciation tables have been established.
  4. Bad Debts: Deduction of losses from bad accounts requires the fulfillment of the following conditions: (i) That the debt relates to operations inherent to the business; (ii) That the amount has been taken into account when calculating the gross taxable income declared, except in the case of losses affecting capitals made available by financial institutions, or in the case of losses associated with loans granted by companies to their employees (iii) The debtor is declared insolvent or the amount indebted does not justify collection expenses.
  5. Loses associated with goods used in the production of income: Losses from fixed assets used in the production of income which have not been compensated by insurance may be deducted, provided that said losses have not been imputed to the cost.
  6. Interests: Interest expenses incurred for the production of income are deductible whether the interest is paid abroad or to a local company. Thin capitalization rules apply when interest is paid to a related party and limitations on the amount deductible will be applicable.
  7. Charitable contributions: Deductions for allowable charitable contributions are limited to 10% of taxable income (before deducting contributions) when taxable income does not exceed 10.000 Tax Units[1]. When taxable income exceeds 10.000 Tax Units, charitable contributions are limited to 8% of taxable income.
  8. Royalties: Payment of royalties to a parent company or affiliates abroad is permitted without authorization. The legal definition of royalty includes the assignment of the use of trademarks, logos, and brand names subject to patenting.
  9. Technical assistance: Technical assistance is legally understood as the supply of instructions, printed information, recordings, films and other similar technical information, for the purpose of producing a sales product or specific service. This includes the transfer of know-how, engineering services, research and development projects, advising and consulting, and the supply of procedures, formulas of production, data, information, technical specifications, diagrams, plans, technical manuals, basic and specific engineering supplies. Training and educational expenses are excluded from the definition of technical assistance. Expenses for technical assistance paid to foreign companies will be non-deductible if these services could have been rendered within Venezuela. In this regard, taxpayers must show to the Tax Administration documents evidencing the arrangements done in order to obtain the aforementioned services within the country. Also, all payments for services that are not necessary for the production process or for the execution of the service are excluded from this definition.
  10. Technological services: The VITL defines fees for technological services to be amounts paid for the use of or enjoyment of industrial patents and trademarks or rights of exploration of or exploitation of natural resources, regardless of how they are describe in the contract. As in the case for technical assistance, expenses for technological services paid to foreign companies will be non-deductible if these services could have been rendered within Venezuela. Taxpayers must show to the Tax Administration documents evidencing the arrangements done in order to obtain the aforementioned services within the country
  11. Intercompany charges: Intercompany transactions such as the payment of professional services and commissions, and general and administrative expenses to foreign affiliated companies must be adequately documented in order to be deductible (debit notes are not sufficient).
I. Taxpayers

The Venezuelan Income Tax law (VITL)[2] adopts the taxation regime based on worldwide income. According to this regime, resident individuals or companies domiciled in Venezuela will pay taxes for the entirety of their annual net and available earnings, obtained in or outside the country. Individuals or companies domiciled abroad with a permanent establishment or fixed base in Venezuela will be subject to tax on the worldwide income attributable to the permanent establishment or fixed place of business. Nonresident individuals or non-domiciled companies will be subject to this tax only when the source or cause of earnings lies within the country, even if they do not have permanent establishment or fixed base in Venezuela.

I. Tax rates

The VITL provides three (3) types of tariff classification of progressive tax rates, applicable according to the kind of taxpayer and the activity performed:

  1. Tariff N° 1, applicable to individuals and taxpayers assimilated under this category, which establishes rates ranging from six percent (6%) to a maximum of thirty four percent (34%);
  2. Tariff N° 2, applicable to stock companies and taxpayers assimilated under this category who carry out activities other than hydrocarbon or related activities, with establishes rates ranging from fifteen percent (15%) to a maximum of thirty four percent (34%). Companies that engage in banking, financial, insurance or reinsurance activities will be taxed with a proportional tax of forty percent (40%) ; and
  3. Tariff 3, applicable to applicable to royalties obtained by mining and oil companies, which establishes rates of sixty percent (60%) and fifty percent (50%), for enrichments derived from mining royalties, and enrichments obtained by oil companies, respectively.
Capital Gains

Capital gains are taxable as ordinary income, and capital losses are deductible from ordinary income. Capital losses resulting from the sale of stock, capital reduction or liquidation of a company are only deductible if they meet one of the following conditions:

  1. The cost of the capital stock was not in excess of the price quoted on a stock exchange or an amount with a reasonable relationship to the book value of the capital stock.
  2. The holding period of the investment was for at least two years immediately preceding the date of the sale.
  3. The stockholder proves that the company selling the shares carried on economic activities for at least two years preceding the date of the sale.

I.1.2. Passive Income

I.1.2.1. Dividends

The VITL provides for a proportional tax of 34% levied on dividends arising from the payer’s Net Income that exceed the Net Fiscal Taxed Income. Therefore, it only applies to the portion not previously taxed at the corporate level. Net Income is understood to be the approved income in a Shareholders’ Meeting according to the Venezuelan GAAP and serves as the base for dividend distribution. As in the case of Net Fiscal Taxed Income, the Net Income is subject to the respective tax rate. When the dividends are paid by companies engaged in the exploitation of hydrocarbons the tax rate will be 50% and if the dividends are generated by companies dedicated to the exploitation of mines, the tax rate will be 60%.

Dividends received from foreign companies shall be subject to a proportional tax of 34%, having the beneficiary of the dividend the possibility of attributing the foreign tax paid for this concept.

Share dividends shall be subject to a prepaid tax of 1% over the value of the declared dividend. Individuals or companies receiving share dividends must declare and pay the total amount of the proportional tax on dividends, upon the sale of the referred to stock.

I.1.2.2. Interest

Unless the debtor can prove otherwise, any sum paid by a debtor in excess of the principal is deemed to be interest. As a general rule, interest is sourced in Venezuela if it is derived from activities carried out in Venezuela or from property located in Venezuela. Specifically, interest is deemed to be derived from activities carried out in Venezuela if the loan principal is used or enjoyed in the country. Interest received by non-resident corporations is therefore subject to Venezuelan income tax if the loan is granted or invested in Venezuela.

Interest paid on loans granted by non-resident financial institutions is subject to a final withholding tax (WHT) at source at a rate of 4.95% on gross income. Interest paid to other non-resident legal entities is subject to tax at a rate of 34% applied to 95% of the gross income.

I.1.1.3. Royalties

Royalties derived by Venezuelan residents is consider ordinary income for income tax purposes.

Royalties received by non-residents are subject to income tax on 90% of gross receipts in the case of royalties and similar payments, other than those derived from mining activities, resulting in an effective WHT rate of 30.6%.

I.1.3. Special Features of the CIT system

Deemed Income

The concept of deemed income is applied to those cases where the Tax Authorities encounter difficulties in estimating the income obtained by the taxpayer, when such taxpayer is domiciled or residing abroad and does not have a permanent establishment in the country.

The VITL provides the application of a special tax regime called “Deemed Income”, which is determined based on gross income obtained by the taxpayer from abroad for activities carried out in the country and applying a percentage which the Law assumes that has been earned on such gross income.

Among other presumptive revenues are:

  1. Transport services from abroad. Their net income is equivalent to ten percent (10%) of their gross profit. The latter shall be represented by fifty percent (50%) of the amount of the freights and ticket fares between Venezuela and abroad and vice versa, and by the entire income arising from freights in Venezuela.
  2. Net earnings obtained by taxpayers who ship merchandise on consignment from abroad to Venezuela, will be equivalent to twenty five percent (25%) of their gross profit.
  3. Net income associated with fees paid to nonresidents in Venezuela or non-domiciled companies is deemed to be ninety percent (90%) of their gross profit.
  4. Net income derived from technical assistance or technological services will be constituted by amounts representing thirty percent (30%) of the gross profit obtained by reason of technical assistance, and fifty percent (50%) of gross profit obtained in compensation for technological services.
  5. Net income derived from royalties and other similar participations is deemed ninety percent (90%) of the gross profit.
Tax Adjustment for Inflation

The Venezuelan Tax Reform promulgated and published in the Official Gazette N° 4,300 of August 13, 1991 introduced inflation adjustment mechanisms for tax purposes on January 1, 1993. The system adopted in 1991 is mainly in force at this date. There is no obligation to record these adjustments in the taxpayer’s statutory accounting books. Currently, companies engages in banking, financial, insurance and reinsurance activities and companies designated as “Special Taxpayers” by SENIAT are excluded from the adjustment for inflation system. The main provisions concerning adjustment for inflation are summarized as follows.

The system provides two types of adjustments:

  • An initial adjustment of depreciable fixed assets that will require a registry tax of 3% of said adjustment.
  • An annual adjustment that is to be applied each year when determining the taxpayer’s net taxable income.

Both adjustments are mandatory for taxpayers carrying out commercial, industrial, financial, and insurance operations, as well as exploitation of mines and hydrocarbons. Both adjustments are optional for taxpayers performing non- commercial activities.

Initial Adjustment

This adjustment has to be made at the closing date of the tax year in which the preoperative stage ends. For this purpose, the preoperative stage ends when the first invoice is issued. The initial adjustment is applicable to all non-monetary assets and non-monetary liabilities except the assets and liabilities in foreign currency. The resulting initial adjustment will increase or decrease the tax equity to be adjusted in the annual adjustments.

The initial adjustment is calculated by applying the variation between the National Consumer Price Index (INPC) prevailing in the month in which the non-monetary assets or liabilities were acquired and the month in which the first operating fiscal period ends. Assets acquired prior to 1950 are deemed to have been acquired in January 1950.

A registry tax of three percent (3%) is applied exclusively to the initial revaluation adjustment of depreciable fixed assets. For the payment of such tax, taxpayers must be registered in the Revalued Asset Registry established by the Tax Administration. The resulting tax can be paid in three (3) consecutive annual installments beginning at the date of registration.

Depreciation or amortization on the revaluation adjustment is allowed based on the original estimated useful life of the assets. When assets subject to this adjustment are transferred or sold, the non-depreciated or non-amortized amount of the revaluation will form part of the sale cost.

Annual Adjustment

This adjustment is applied to tax periods after the tax year in which the initial adjustment took place. The accounts must be adjusted by applying the adjustment factor to the items of the balance sheet at the closing dates; the resulting annual adjustment will increase or decrease taxable income.

Income Tax Withholdings

The withholding tax corresponds to the amount discounted by the payer to the beneficiary of income, equivalent to the entire or partial amount of tax due. The objective of this system is the advanced collection of tax payment as well as the control measures in regards to the income obtained by taxpayers.

The VITL has designated as withholding agent, among others, the debtors of net or gross income, salaries, wages and similar. In this regard, withholding agents are responsible before the National Treasury for any tax withheld and not paid, and are jointly liable along with the taxpayers for taxes not withheld. Further, in the event of excess or unauthorized withholdings, withholding agents are liable before taxpayers for the corresponding tax.

The law provides the obligation of payers of net or gross income to apply withholding tax to resident or nonresidents individuals or companies (domiciled or not) for services rendered by contractors and sub-contractors, leasing of goods, advertising services and professional fees, among others. Such withholding tax must be applied according to the withholding rates established in the Decree 1.808 on the Income Tax Law Partial Regulations Regarding Withholdings.

The withholding tax must be applied at the time the amount is paid or credited to account whichever occurs first. The latter corresponds to amounts recorded in the accounting of debtors, by means of nominative entries in favor of their creditors, for being credits which are legally demandable at the date of entry. This should be notified to the beneficiaries by means of credit notes, signed by the debtors, within the first five business days following the accounting record. According to our legislation, payments in kind are not subject to withholding.

Main categories of income subject to withholding taxes in Venezuela are as follows:

Withholding percentage on the amount paid or credited into account





Non- resident



Professional fees




30.6% (1)

Financial commissions









32.30% (2)

Interests (Foreign financial institutions)


Contractors and Sub-contractors for rendering services





Lease of real estate





Lease of chattel





Sale of trust fund





Sale of stock exchange





Sale of unlisted stock





Royalties and similar participation

30.6% (3)

30.6% (3)

Technical assistance

10.2% (4)

10.2% (4)

Technology services

17% (5)

17% (5)

Freights in Venezuela



Freights to International transportation companies

1.7% (6)

1) Withholding effective rate: maximum tranche (34%) of the progressive rate for legal entities (rate N°2) over an alleged tax basis of 90%.

2) Withholding effective rate: maximum tranche (34%) of Rate N°2 over an alleged tax basis of 95%. (3) Withholding effective rate: maximum tranche (34%) of Rate N°2 over an alleged tax basis of 90%.

3) Withholding effective rate: maximum tranche (34%) of Rate N°2 over an alleged tax basis of 30%.

4) Withholding effective rate: maximum tranche (34%) of Rate N°2 over an alleged tax basis of 50%.

5) Withholding effective rate: maximum tranche (34%) of Rate N°2 over an alleged tax basis of 5%.

Transfer Pricing

The transfer pricing regime is a mechanism of fiscal control that pursues the avoidance of artificial prices or any compensation used in the transfer of goods and services between linked parties, which may damage the fiscal income of the jurisdictions involved, cause double imposition and propitiate litigiousness between fiscal administration parties.

The Venezuelan transfer pricing rules adopt the arm’s-length standard for related party transactions, adhere to the Organization for Economic Co-operation and Development (OECD) Guidelines, eliminate the safe harbor regime and impose transfer pricing documentation and filing requirements and contain APA (Administrative Provisions Act) provisions.

Related parties are defined as parties that are directly or indirectly managed, controlled or owned by the same party or group, intermediary agents and any relationship between a Venezuelan taxpayer and entities located in low-tax jurisdictions (i.e. a country included in the list of tax havens). The arm’s-length standard applies to all transactions, including transfers of tangible and intangible property, services and financial arrangements.

The arm’s length principle stands of transfer pricing states that the amount charged by one related party to another for a given product must be the same as if the parties were not related. This standard applies to all transactions, including transfers of tangible and intangible property, services and financial arrangements.

The transfer pricing methods specified in the Venezuelan Income Tax Law are essentially the same as those contained in the OECD Guidelines:

  • Comparable uncontrolled price method.
  • Resale price method.
  • Cost plus method.
  • Profit split method.
  • Transactional net margin method.

The VITL specifically provides that the preferred method is the Comparable uncontrolled price method.

I.1.3.1. Existence of Group Regime

There is no provision for consolidated tax returns in the VITL.

I.1.3.2. Treatment of Losses

The VITL provides that net operating losses can be carryforward for three years, however the amount of losses available for carryforward may not exceed twenty five percent of the tax period’s taxable income. Additionally, the VITL provides that segregated loss carryforwards (i.e., foreign operating or domestic operating) may be use only against future income of the same type (i.e., foreign operating or domestic operating). Losses derived from inflationary adjustments cannot be carryforward.

I.1.3.3. Tax Holidays

Tax holidays are not provided in the VITL.

I.2. Corporate Income Tax on International Level

I.2.1. Inbound Transactions

There is no differentiation on the tax treatment on international. Low Tax Regimes are only important for the application of the CFC rules detailed below in Chapter I.3.3. The definition of PE, Branch Income and treatment of foreign tax credits may be included in this chapter:

Permanent establishment (PE)

According to the VITL, generally, a passive party is deemed to be carrying out operations in Venezuela through a PE when:

  • The passive party owns, directly or through an agent, employee, or representative in the Venezuelan territory,:
    • an office, fixed place of business, or an activity centre where its activities are totally or partially carried on
    • management headquarters, branches, offices, factories, shops, facilities, warehouses, stores, construction, installations, or assembling works, when the duration thereof exceeds six months, or
    • agencies or representatives authorised (according to the VITL) to contract in the name of or on behalf of the passive party.
  • The passive party performs, directly or through an agent, employee, or representative in the Venezuelan territory, professional, artistic activities.
  • The passive party possesses, directly or through an agent, employee, representative, or other contracted personnel in the Venezuelan territory, other work places where the operations are wholly or partially performed.

Any agent acting independently shall be excluded from this definition, except if such representative has the power to conclude contracts in the name of the principal.

Branch Income

Branches of foreign corporations are subject to the same tax rules as Venezuelan corporations. Inter-branch income and deductions must be eliminated. The positive difference between a branch’s annual book and taxable income is deemed to be remitted to the branch’s head office (branch profits tax). Such remittances are subject to the 34% flat dividend tax regardless of whether there is an actual payment unless the branch can provide proof of reinvestment of its profits for a five-year period. If such proof is established, no deemed remittance is assumed.

Foreign tax credit

Foreign income tax paid on taxable foreign income may be offset by the payable Venezuelan tax, up to the proportion of Venezuelan payable tax related to foreign-source income. Taxpayers must keep documentation of foreign tax. No carryforward rules are provided for in domestic regulations.

I.2.2. Outbound Transactions

There is no differentiation on the tax treatment on international. Low Tax Regimes are only important for the application of the CFC rules detailed below in Chapter I.3.3

I.3. Anti-Avoidance Legislation

The Venezuelan Master Tax Code provides that the tax authority has the power to re-characterize or denied for tax purposes the incorporation of companies, contracts and in general any legal form adopted by the taxpayer when it is determined that is was created/adopted to avoid taxes in Venezuela.

I.3.1. Abuse of Law

There are no specific abuse of law provisions established in the Venezuelan tax regulations.

I.3.2. Thin Capitalization Rules

Thin capitalization rules limit the deduction of interests from debt with related parties in excess of a 1:1 debt-to-equity ratio. Under these rules, if the average of a taxpayer’s debt (with related and unrelated parties) exceeds the average amount of its equity for the respective fiscal year, the excess debt is treated as equity for income tax purposes. Consequently, the ability to deduct interests on related party loans may be affected.

I.3.3. CFC Legislation

The International Tax Transparency Regime provides that domiciled corporations or resident individuals who maintain and control investments, directly, indirectly, or through third parties in Low Tax Jurisdiction (LTJ) by means of branches, companies, real or movable property, shares, bank or investment accounts, trusts, temporary associations or any other kind of arrangement will be subject to the provisions of the International Tax Transparency Regime.

The terms stated herein will be applicable as long as the taxpayer is given the choice at the time the yields, profits or dividends derived from entities located in LTJ are distributed, or when said taxpayers control the administration of these entities, whether directly, indirectly or through a third party.

For such purposes, an investment is considered as located in a LTJ when one of the following circumstances is present:

  • When accounts or investments are held with institutions located in said jurisdiction.
  • When a domicile or post office address is available.
  • When there is an effective headquarter.
  • When there is a permanent establishment.
  • When the investing party is incorporated or physically present in said jurisdiction.
  • When any kind of legal business is carried out, regulated or perfected pursuant to the legislation of such jurisdiction.

Yields on investments held in a LTJ will be consider as taxable on an annual basis when generated, proportionally to the direct or indirect participation in said investment. This provision will be applicable even if the income, dividends or profits have not been distributed. Except for proof to the contrary, the amounts received in a LTJ will be considered (on an annual basis) as gross income or dividends derived from such investments.

As of today, the following countries are considered LTJ by Venezuela:

  • Albania – Andorra – Angola
  • Anguila – Antigua and Barbuda – Aruba
  • Ascension – Bahamas – Bahrain
  • Belize – Bermuda – British Virgin Islands
  • Brunei – Campione D’Italia – Canary Special Zone
  • Cape Verde – Cayman Islands – Channel Islands
  • Christmas Island – Cocos Island – Cook Islands
  • Cyprus – Djibouti – Dominica
  • Dominican Republic – French Polynesia – Gabon
  • Grenada – Greenland – Guam
  • Guyana – Hong Kong – Honduras
  • Isle of Man – Jordan – Kiribati
  • Labuan – Lebanon – Liberia
  • Liechtenstein – Luxemburg – Pacific Islands
  • Puerto Rico – Saint Pierre and Miquelon – Macau
  • Malta – Marshall Islands – Mauritius
  • Monaco – Montserrat – Nauru
  • Norfolk – Niue – Oman
  • Ostrava Free Zone – Palau – Panama
  • Pitcairn – Qeshm – Saint Helena
  • Samoa – San Marino – Seychelles
  • Solomon Islands – Sri Lanka – St Vincent and the Grenadines
  • Svalbard – Swaziland – Tokelau
  • Tristan da Cunha – Tunisia – Turks and Caicos
  • Tuvalu – Uruguay – US Virgin Islands
  • Vanuatu – Yemen

I.4. Tax Treaty Law

Treaties to Avoid Double Taxation (DTT) are conventions negotiated among countries, for the purposes of defining the fiscal treatment applicable to allow taxpayers have presence in both countries.

The ultimate goal of a DTT is to eliminate or reduce the impact that a double taxation may have on taxpayers, when there is attempt to levy the same income in both countries. This is achieve by allocating taxable matters between the countries. In addition to reducing or eliminating double taxation, DTTs also help to properly distribute fiscal income between the countries, prevent tax evasion, and promote the free flow of international trade.

With regards to hierarchy, in accordance with article 2 of the Venezuelan Master Tax Code, DTTs prevail over domestic income tax law. DTTs are standards of international legislation, and as such, they are to be construed according to the Vienna Convention regarding Treaties Legislation. These standards stipulate general principles relating good faith, the predominance of the text and the need to take into account the objective and purpose of the Treaty.

I.4.1. Adherence to UN or OECD MC

DTT´s entered into by Venezuela are mostly based on the model proposed by the Organization for Economic Cooperation and Development (OECD), published for the first time in 1963 and periodically reviewed ever since. These treaties reflect the consent of the Government on matters such as double taxation, source of income, taxpayers’ identity, effective date, and administrative matters.

I.4.2. Special Features commonly present on Tax Treaties

There are no clauses that may differ from the OECD model.

I.4.3. Treaties Currently in Force

Venezuela has signed DTT’s with the following countries:

Double tax treaties signed by Venezuela









Czech Republic















Saudi Arabia




Trinidad & Tobago

United Arab Emirates

United Kingdom

United States


I.5. Community Law

As mentioned before, Article 2 of the Venezuelan Master Tax Code provides that international treaties signed by Venezuela prevail over domestic income tax law.

I.5.1. Participation in a Community/Union

Venezuela is a member of the Mercosur trade agreement along with Argentina, Brazil, Paraguay and Uruguay (with Bolivia, Chile, Colombia, Ecuador and Peru as associate members). The agreement which sets out the basis for a common market among the member states aims to promote the free movement of goods, services and people by eliminating obstacles to regional trade. The trade of goods originating in, and proceeding from Mercosur countries is not subject to import duties, and a common external tariff applies for most of the tariff classification items.

Venezuela is also a member of the Latin America Integration Association (ALADI in Spanish), which includes all countries in South America and Mexico. ALADI aims to create a common market for the member countries through progressive tariffs reductions and to encourage free trade.

I.5.2. Rules regarding Corporate Income Taxation within the Community/Union

Neither Mercosur nor ALADI have enacted rules to regulate income tax or to mitigate double taxation among the member countries.

I.5.3. Jurisprudence regarding Corporate Income Taxation within the Community/Union


I.6. Influence of BEPS Action Plan on the Country

As of today, BEPS has not been considered in Venezuela.

I.6.1. Adoption of rules in line with BEPS Reports

No specific legislative changes have been made or proposed based on BEPS. Certain matters addressed by BEPS are already regulated by VITL and/or case law (substance requirements, thin capitalization rules, restrictions to interest deduction, among others).

I.6.2. Participation in Multilateral Instrument

None as of today. No commitment yet to introduce CbC reporting.

I.7. Jurisprudence

There has been no relevant tax case law in the past 5 years.

  1. Tax Unit was introduced in 1994 as an element that reduces the negative effects created by inflation on the determination of tax rates and penalties. The value of the Tax Unit is adjusted annually according to the variation of the consumer price index from the previous year. For 2016 1 Tax Unit equals VEF 177.
  2. Published in Venezuelan Official Gazette N˚ 6.210 dated December 30, 2015.

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