GLOBAL INDIRECT TAX Venezuela Country VAT/GST Essentials kpmg.com TAX
b Venezuela: Country VAT/GST Essentials
Venezuela: Country VAT/GST Essentials Contents Scope and Rates 2 What supplies are liable to VAT? 2 What is the standard rate of VAT? 2 Are there any reduced rates, zero rates, or exemptions? 2 Registration 3 Who is required to register for Venezuelan VAT? 3 Are there penalties for not registering or late registration? 3 Are there any simplifications that could avoid the need for an overseas company to register for VAT? 3 VAT Grouping 4 Is VAT grouping possible? 4 Can an overseas company be included in a VAT group? 4 Returns 4 How frequently are VAT returns submitted? 4 Are there any other returns that need to be submitted? 4 VAT Recovery 5 Can I recover VAT if I am not registered? 5 Does your country apply reciprocity rules for reclaims submitted by non-established businesses? 5 Are there any items that you cannot recover VAT on? 5 Invoices 6 What do I have to show on a tax invoice? 6 Can I issue invoices electronically? 6 Is it possible to operate self-billing? 6 Transfers of Business 7 Is there a relief from VAT for the sale of a business as a going concern? 7 Options to Tax 7 Are there any options to tax transactions? 7 Head Office and Branch Transactions 8 How are transactions between head office and branch treated? 8 Bad Debt 8 Am I able to claim relief for bad debts? 8 Anti-Avoidance 8 Is there a general anti-avoidance provision under VAT law? 8 Penalty Regime 9 What is the penalty and interest regime like? 9 International Supplies of Goods and Services 5 How are exports of goods and services treated? 5 How are goods dealt with on importation? 5 How are services which are brought in from abroad treated for VAT purposes? 5 All information reflected in this document was obtained/summarized from KPMG in Venezuela as of October 2011.
2 Venezuela: Country VAT/GST Essentials Scope and Rates What supplies are liable to VAT? Value-added tax (VAT) is due on any supply of goods (except to real estate goods) or services made in the country. Supply includes all forms of supply. It is not restricted to the provision of goods and services by way of sale but can apply equally to other forms of transaction. Supply does not include anything not done for consideration. However, certain actions carried out without consideration are deemed to be supplies as a self-consumption; for example business gifts and private use of business assets. What is the standard rate of VAT? The standard rate applicable is 12 percent. The VAT rate will be adjusted on an annual basis with the budget law (Ley Presupuesto Anual). The yearly adjusted VAT rate must range between 8 percent and 16.5 percent. Are there any reduced rates, zero rates, or exemptions? Zero Rates exportation of goods and services are subject to a zero rate sales of natural hydrocarbons performed from jointventures companies (empresas mixtas) to Petróleos de Venezuela, S.A. or any of its subsidiaries allows tax recovery. Reduced Rate certain goods and services (such as red meat, animal oil, or domestic plane tickets), have temporary rate of 8 percent, until the budget law provides a different rate. Increased Rate an increased rate of 19 percent (additional ten percentage points above the general rate) applies on luxury goods.
Venezuela: Country VAT/GST Essentials 3 Registration Exemptions national transportation services of people, except from air travel tickets import under Andean Trade Preference Act (ATPA) regime intangible assets loans banks and financial institutions operations except by leasing insurance services payroll operations performed on duty free and tourist areas, such as Peninsula de Paraguaná, Mérida, Sta. Elena de Uairén, and Atuja basic food elements, described on article 18 of the Law and its transportation. (Exceptions apply) medicine fertilizer fuel newspapers, books, magazines, and the paper to edit them education home electricity, water, natural gas. Who is required to register for Venezuelan VAT? Venezuelan Entities If your business makes sales of taxable supplies in Venezuela you are required to file VAT returns, but no additional registration will be required. Foreign Entities Foreign entities are not required to assess VAT; in cases of import of goods and services the buyer is responsible for payment of VAT. Are there penalties for not registering or late registration? Not applicable. Are there any simplifications that could avoid the need for an overseas company to register for VAT? Not applicable.
4 Venezuela: Country VAT/GST Essentials VAT Grouping Is VAT grouping possible? No, each taxpayer pays it owns taxes, and there is no opportunity to offset credits and debits between taxpayers. Returns How frequently are VAT returns submitted? Local taxpayers are required to submit VAT returns on a monthly basis. Can an overseas company be included in a VAT group? Not applicable. Are there any other returns that need to be submitted? Withholding VAT returns must be filed every 15 days, that is twice a month.
Venezuela: Country VAT/GST Essentials 5 VAT Recovery Can I recover VAT if I am not registered? No, only local taxpayers are allowed to recover VAT. Does your country apply reciprocity rules for reclaims submitted by non-established businesses? Information not available. Are there any items that you cannot recover VAT on? VAT exemptions do not allows VAT recovery, the amount paid as VAT becomes part of expenses and cost. Non-VAT taxpayers are not able to recover VAT. International Supplies of Goods and Services How are exports of goods and services treated? Exports are subject to VAT at the 0 percent rate with the exporter being allowed to recover any VAT paid in order to produce or buy the goods or services exported. How are goods dealt with on importation? When goods are imported into Venezuela, VAT and customs duties are due. They have to be paid or secured before the goods will be released from customs control. The VAT paid can be offset against the VAT charged by the acquirer on its VAT taxable operations, on its VAT return. How are services which are brought in from abroad treated for VAT purposes? In case of services, once the invoice is recorded in the accounting books, the VAT should be paid and can be offset against the VAT charged by the acquirer on its VAT taxable operations, on its VAT return. Additionally, the acquirer has to issue an invoice as partly responsible for the VAT generated by the import of services.
6 Venezuela: Country VAT/GST Essentials Invoices What do I have to show on a tax invoice? the document must clearly establish if it is an invoice, credit note or other document a sequential invoice number a sequential tax control number (Número de Control) total control number assigned to the company invoices must be printed with at least one copy the name, address, and registration number of the supplier tax registration numbers RIF the name, address, and registration number of the authorized printer, as well as the number of the printer s tax authorization tax address of the head office in cases of permanent establishment the date of issue of the document (DD/MM/YYY) the name and address of the customer tax registration numbers RIF of the costumer the date of issue of the document related to good delivery if such was made prior to the invoice date the quantity and nature of the goods/services supplied at each VAT rate indication of any amount that is charged to the sale price (interest) indication of applicable discounts total sales price taxed the total amount of VAT payable if the seller is not a VAT tax payer, the document must state, that no tax credit will be derived in that sale if the sale is invoiced in the name of a third party, it must clearly be indicated in the invoices. Can I issue invoices electronically? Yes. Invoices and equivalent documents may be issued electronically in two ways: printing forms acquired from authorized printer or using a tax computer. In addition, this can be done through secured hardware that cannot be accessed by anyone but the tax authorities. Is it possible to operate self-billing? No.
Venezuela: Country VAT/GST Essentials 7 Transfers of Business Is there a relief from VAT for the sale of a business as a going concern? No, even in cases of liquidation, VAT would be applied on the assets returned to shareholders. Options to Tax Are there any options to tax transactions? Real estate leases are taxed if they are used for commercial purposes.
8 Venezuela: Country VAT/GST Essentials Head Office and Branch Transactions How are transactions between head office and branch treated? If your head office makes a charge related to services to its branch or vice versa, this is not treated as a supply for Venezuelan VAT purposes, as both the head office and its branch are considered the same entity. Bad Debt Am I able to claim relief for bad debts? No relief for bad debts is established by Law, even though most of the companies claim them when they have all the supporting documentation. Another procedure applied by business is to issue a credit note against the invoices, to reverse VAT debits. Anti-Avoidance Is there a general anti-avoidance provision under VAT law? There is a general anti-avoidance provision under the Venezuelan Organic Tax Code. In addition, VAT has its own rules.
Venezuela: Country VAT/GST Essentials 9 Penalty Regime What is the penalty and interest regime like? There are certain penalties for failing to fulfill formal obligations, some examples are as follows: Not filing returns 10 U.T. increases in 10 U.T. for each new action until 50 U.T. Filing late 5 U.T. increases in 5 U.T. until 25 U.T. Late payments 1 percent of the tax paid. Not withholding From 100 percent to 300 percent of the tax Paying late withholding taxes 50 percent monthly to 500 percent of the tax Not use of the proper invoices 1 U.T. for each invoice up to 200 U.T. Company close from one to five days if penalty is over 200 U.T. in one period Non-having sale and purchased book 50 U.T. increase in 50 U.T. until 250 U.T. Company close for three days Having purchases and sales book improperly 25 U.T. increase in 25 U.T. up to 100 U.T. Company close by three days For withholding less than the proper amount From 50 percent to 150 percent of the tax
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