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BASIC COUNTRY FACTS

Bolivarian Republic of Venezuela

Caracas

  • panish
  • Indigenous languages (e.g. Wayuu, Warao, Piaroa)

28.87 million

Venezuelan bolívar Petro (cryptocurrency)

.ve

+58

Venezuelan bolívar Petro (cryptocurrency)

STATUTORY LABOR REQUIREMENTS

Probation Period

  • The first 30 days of the employment relationship are deemed as a probation period

Annual Leave

  • Workers are entitled to take 15 working days per year of paid vacation upon completion of one uninterrupted year of service, plus one additional working day for each subsequent year of service, up to a maximum of 15 additional working days

Public Holidays

  1. New Year's Day (1st January)
  2. Carnival (24th to 25th February)
  3. Maundy Thursday (9th April)
  4. Good Friday (10th April)
  5. Declaration of Independence Day (19th April)
  6. Labor Day (1st May)
  7. Anniversary of the Battle of Carabobo (24th June)
  8. Independence Day (5th July)
  9. Simón Bolívar's birth (24th July)
  10. Assumption of Mary (15th August)
  11. Indigenous Resistance Day (12th October)
  12. Rafael Urdaneta's Birthday (24th October)
  13. All Saints' Day (1st November)
  14. Christmas Eve (24th December)
  15. Christmas Day (25th December)
  16. New Year's Eve (31st December)

Maternity Leave

  • Pregnant employees are entitled to take six weeks' leave before giving birth and 20 weeks' leave after giving birth (Article 336, New OLL). 
  • During this period, pregnant employees receive 66.66% of their monthly salary from social security

Paternity Leave

  • A father is entitled to paid paternity leave from the social security system of 14 continuous days from the date of birth (Article 339, New OLL). 
  • The father (regardless of marital status) cannot be dismissed for up to two years after the child's birth (Article 339, New OLL).

Sick Leave

  • The employer must pay salary only for the first 3 days of sickness; after this period the employee will receive an indemnity from the social security in lieu of salary.

Work Hours

  • In general, the maximum number of working hours without overtime pay for a day shift is 8 hours per day and 40 hours per week.
  • The official work week is only 2 days for the public sector

Overtime

  • Overtime must be paid with a surcharge of at least 50% over the normal salary value for the corresponding ordinary shift. 
  • An employer may not require its workers to work more than 10 hours’ overtime per week or more than 100 hours’ overtime per year.

Notice Period

  • There is no statutory notice period in Venezuela, this is usually something that is agreed upon in the employment contract.

Severance

  • In case of termination of the employment relationship, the employer must calculate the severance payment based on 30 days of salary per year or per portion greater than 6 months of service. 
  • This calculation must be based on the salary received by the employee at the termination of the employment relationship. 
  • The worker has the right to receive the highest amount between those two sort of compensations.

13th Month Salary in Brazil

  • Yes
  • There is no statutory requirement to pay the13th or 14th month salary.
  • However, in his bid to increase adoption of the country's crypto currency.
  • Maduro, has promised half a Petro to workers and pensioners alike.
  • The payment would be made as a Christmas bonus and it would be equivalent to $30.

INCOME TAX

  • Taxable net employment income consists of all compensation or profit, regular or accidental, resulting from the provision of personal services under a dependence relationship, regardless of the character of the wages.
  • Resident individuals are subject to tax on their worldwide income.
  • Individuals are considered resident for tax purposes if they are physically present in Venezuela for more than 183 days in the current or immediately preceding calendar year. 
  • Residents are subject to tax if their annual worldwide gross income exceeds 1,500 tax units or if their annual worldwide net income exceeds 1,000 tax units.
  • Foreign resident individuals with a fixed base in Venezuela must pay taxes on their income of national or foreign source attributable to said base.
  • Non-resident individuals pay taxes on their income whenever the cause or origin of such income lies within Venezuela.
  • Nonresident individuals are subject to a final withholding tax at a flat rate of 34% on income derived from Venezuelan sources.

Range of taxable income in tax units (TU)

Tax rate (%)

Deduction (TU)

Over

Not Over

0

1000

6

0

1000

1500

9

30

1500

2000

12

75

2000

2500

16

155

2500

3000

20

255

3000

4000

24

375

4000

6000

29

575

6000

  

34

875

DEDUCTIBLE EXPENSES

Personal Deductions

  • Educational payments made in Venezuela for the taxpayer and for dependent children under 26 years of age are deductible. The age limit does not apply in cases of special education.
  • Life, surgery, hospitalization, and maternity insurance premium payments to entities domiciled in Venezuela are deductible.
  • Medical, dental and hospitalization payments to entities domiciled in Venezuela are deductible.
  • Rent or interest payments on loans granted for the acquisition or enlargement of the taxpayer's home are deductible. 
  • The authorized deduction cannot exceed TU 1,000 for the fiscal year in the case of interest on loans, or TU 800 for the fiscal year in the case of payments associated with the leasing of main or permanent housing.

Standard Deductions

  • Resident taxpayers have the option to claim a special (single) deduction of TU 774. 
  • No documentation is necessary. 
  • Taxpayers who choose the special deduction cannot claim the itemized personal deductions

Personal Allowance

  • Generally, personal allowances take the form of tax credits, i.e. deductions from tax payable.
  • Residents are entitled to a personal tax credit of TU 10 for the taxpayer, spouse, and any dependent under legal age unless they are not capable for work or are studying and are under twenty-five years of age.

Business Deductions

  • Resident individuals who are not employees can deduct expenses allowed by law, using the same guidelines applicable for corporations
  • Thus, business deductions include depreciation and amortization, goodwill, interest expenses, bad debt, charitable contributions, municipal, state and local taxes.

 

Deductible Expenses

Personal Deductions: -

  

Educational Expenses
  • Educational payments made in Venezuela for the taxpayer and for dependent children under 26 years of age are deductible. 
  • The age limit does not apply in cases of special education.

Life Insurance premium
  • Life, surgery, hospitalization, and maternity insurance premium payments to entities domiciled in Venezuela are deductible.

Medical Expenses
  • Medical, dental and hospitalization payments to entities domiciled in Venezuela are deductible.

Mortgage Deductions
  • Rent or interest payments on loans granted for the acquisition or enlargement of the taxpayer's home are deductible. 
  • The authorized deduction cannot exceed TU 1,000 for the fiscal year in the case of interest on loans, or TU 800 for the fiscal year in the case of payments associated with the leasing of main or permanent housing.

Standard Deductions: -
  • Resident taxpayers have the option to claim a special (single) deduction of TU 774. 

Personal Allowance: -
  • Residents are entitled to a personal tax credit of TU 10 for the taxpayer, spouse, and any dependent under legal age unless they are not capable for work or are studying and are under twenty-five years of age.

Business Deductions: -
  • Resident individuals who are not employees can deduct expenses allowed by law, using the same guidelines applicable for corporations
  • Thus, business deductions include depreciation and amortization, goodwill, interest expenses, bad debt, charitable contributions, municipal, state and local taxes.

IMMIGRATION

  • Under the Immigration Law, foreign citizens who intend to render services in Venezuela for more than 90 days must obtain a labor permit (authorization) and a labor visa (Working Transient Visa; known as “TR-L”). 
  • The company that intends to employ the foreign citizen requests the labor permit. 
  • If a foreign citizen will not be in Venezuela for more than 90 days, neither a labor permit nor a labor visa is required. 
  • To obtain a TR-L, the foreign citizen must have a passport that had been issued by the respective authority at least 6 months before the request for the TR-L, as well as an employment contract with a Venezuelan entity. 
  • The visa has a term of one year and may be renewed for an additional term of one year. 
  • The holder of the TR-L may make multiple entries into Venezuela or may stay in Venezuela for the entire period of the visa. 
  • To obtain a labor visa and work permit, the company must file an application with the Office of Migration and the Ministry of Labor, which will issue the labor visa and the labor permit respectively, within 15 business days following the request.
  • In practice, the period for the issuance of the visa may be extended for an additional 15 days. 
  • Work visa

To obtain a work visa, the following documents must be submitted to the Office of Migration (Dirección de Extranjería): 

    • Proof of payments by the employer to the National Socialist Training Institute (Instituto Nacional de Capacitación y Educación Socialista, or INCES) 
    • Proof of last three payments by the employer to the social security system
    • Copy of municipal license of the company 
    • Copy of last income tax return of the company 
    • Authorization letter 
    • Justification letter (providing reasons for requesting labor visa) 
    • Entry request form, issued by the Administrative Service Office for Identification, Immigration and Foreign Purposes (Servicio Administrativo de Identificación, Migración y Extranjeria, or SAIME) 
    • Two wallet-sized photos of the foreign worker 
    • Copy of the entire passport (including blank pages) 
    • Notarized employment contract (original) 
    • University or college or technical or associate degree, translated into Spanish if in another language, and legalized in the country of residence before the Venezuelan consulate, or annotated 
    • Résumé, translated into Spanish if in another language, and legalized in the country of residence before the Venezuelan consulate, or annotated
  • Work permit 
  • To obtain a work permit, the following documents must be filed with the Ministry of Labor: 
    • Copy of the document of incorporation and bylaws of the contracting company 
    • Copy of notarized employment contract 
    • Employment declaration form and hours worked (this form is issued by the Ministry of Labor) 
    • Justification letter (providing reasons for requesting labor permit) 
    • Format of job offer issued by Ministry of Labor (original and two copies)
  • Information filed with the Labor Inspector Office (Inspectoría del Trabajo), including a copy of the Tax Identification Number (Registro Unico de Información Fiscal, or RIF) of the contracting company, company name, number of employees and workers and authorization letter

Type of Visa/ Permit

Documentation

Validity

Eligibility

Working Transient Visa (TRL)
  • Proof of payments by the employer to the National Socialist Training 
  • Proof of last three payments by the employer to the social security system
  • Copy of municipal license of the company 
  • Copy of last income tax return of the company 
  • Authorization letter 
  • Justification letter (providing reasons for requesting labor visa) 
  • Entry request form, issued by the Administrative Service Office for Identification, Immigration and Foreign Purposes 
  • Two wallet-sized photos of the foreign worker 
  • Copy of the entire passport 
  • Notarized employment contract (original) 
  • University or college or technical or associate degree, translated into Spanish if in another language, and legalized in the country of residence before the Venezuelan consulate, or annotated 
  • Résumé, translated into Spanish if in another language, and legalized in the country of residence before the Venezuelan consulate, or annotated

1 year (can be renewed)

Foreign citizens who intend to render services in Venezuela for more than 90 days must obtain a labor permit (authorization) and a labor visa (Working Transient Visa; known as “TR-L”).

Work Permit
  • Copy of the document of incorporation and bylaws of the contracting company 
  • Copy of notarized employment contract 
  • Employment declaration form and hours worked (this form is issued by the Ministry of Labor) 
  • Justification letter (providing reasons for requesting labor permit) 
  • Format of job offer issued by Ministry of Labor (original and two copies)
  • Information filed with the Labor Inspector Office), including a copy of the Tax Identification Number (Registro Unico de Información Fiscal, or RIF) of the contracting company, company name, number of employees and workers and authorization letter

1 year (can be renewed)

Foreign citizens who intend to render services in Venezuela for more than 90 days must obtain a labor permit (authorization) and a labor visa (Working Transient Visa; known as “TR-L”).

VALUE ADDED TAX

  • VAT is due on all goods and services supplied domestically or imported. 
  • Exports are exempted. 
  • Under Venezuela’s budget law, it must set its standard VAT rate between 16.5% and 8%.

VAT

Luxury Rate

15%

Standard Rate

16%

Reduced Rate

8%

Zero Rate

0%

Exempt Rate

0%

WITHHOLDING TAX

Dividends

  • Dividends paid to both resident and non-resident individuals and legal entities generally are exempt
  • However, if dividend distributions exceed the payer company’s net taxed income, a 34% withholding tax applies

Interest

  • Interest paid to a nonresident legal entity is taxed at the standard corporate income tax rate (i.e. 15%, 22%, and 34$) applied to 95% of the gross payment, resulting in effective rates of 14.7%, 20.9% and 32.3%, provided certain requirements are met
  • Interest paid to nonresident banks or financial institutions is subject to a 4.95% withholding tax.
  • Interest paid to a nonresident individual is subject to a 34% withholding tax

Royalties

  • Royalties paid to a nonresident company or a resident individual are subject to withholding tax at a maximum rate of 34% applied to 90% of the gross payment, resulting in an effective maximum rate of 30.6%

Technical Service fees

  • Technical assistance fees paid to a nonresident company or a resident individual are subject to withholding tax at a maximum rate of 34% applied to 30% of the gross payment, resulting in an effective maximum rate of 10.2%

Branch Remittance Tax

  • A branch profits tax is levied on Pes of foreign enterprises at a rate of 34%

 

WHT

Dividends

34%

Interest

Interest paid to a nonresident legal entity

14.7%, 20.9%, 32.3%

Interest paid to nonresident banks or financial institutions

4.95%

Interest paid to a nonresident individual

34%

Royalties

34%,

Effective maximum rate of 30.6%

Technical Service Fees

34%,

Effective maximum rate of 10.2%

Branch Remittance Tax

34%

TERMINATION

  • Employees may either be subject to so-called job stability (estabilidad), or protected by the bar against dismissal (inamovilidad), both of which significantly limit the scope for termination.
  • Job Stability
    • Employees covered by the stability procedure might be dismissed with justified cause, but after the dismissal, the employer must file a "participation of dismissal" before a labor judge, explaining the facts and legal causes for the dismissal. 
    • Legal cause might include, among others reasons: misconduct; defamation of the employer; lack of due care or negligence, affecting health and safety at work; unjustified absence during 3 working days in a month; material damage to working machines or tools, caused intentionally or by lack of due care; disclosure of professional or trade secrets; serious failure of employment obligations; or sexual or workplace harassment.
    • In general, all employees are protected by job stability, except upper-management employees.
  • Bar against dismissal
    • Protected employees shall not be dismissed without justified cause and previous authorization of the Labor Inspector. 
    • An employee is entitled to claim reinstatement and back pay when dismissed without authorization.
  • There is no statutory notice period in Venezuela, this is usually something that is agreed upon in the employment contract.

STATUTORY BENEFITS

  • These are mandatory benefits as postulated by law
  • These include probationary period, annual leave, public holidays, maternity leave, paternity leave, sick leave, overtime pay, notice period, severance pay, and 13th month pay
  • Statutory benefits also include social security benefits

Statutory Benefits

Probationary Period

Annual Leave

Public Holidays

Maternity Leave

Paternity Leave

Sick Leave

Overtime Pay

Notice Period

Severance Pay

13th Month Pay

Social Security Benefits

PAYMENTS AND INVOICING

  • For individuals, the tax year in Venezuela is the calendar year. 
  • Tax returns must be filed by 31 March of the following tax year. 
  • The tax liability indicated on the return may be paid in three portions. 
  • The first is due when the return is filed, the second one within 20 days after filing the return and the third one within 40 days after the return is filed. 
  • Married persons are taxed either jointly or separately, at the taxpayers’ election, on all types of income.

EASE OF DOING BUSINESS

  • The ease of doing business index is an index created by Simeon Djankov, an economist at the Central and Eastern Europe sector of the World Bank Group.
  • Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
  • According to the World Bank Venezuela ranked 188th in the World in 2019 in terms of ease of doing business.

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