There are several key areas to be aware of within Venezuela’s employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department. Venezuelan labour relationships and employment contracts are mainly governed by the Organic Labor Law (19 June 1997) and its Regulation (25 January 1999). There are specific labour rules that apply to residents and non-residents of Venezuela.
There are specific rules in Venezuela depending on whether your company employs residents or non-residents. The key concerns for a company that needs to comply with tax laws in Venezuela are net taxable income, social security contribution, value added tax (VAT), corporate income tax and real property tax.
Foreign employees are required to obtain work visas and work permits to work in Venezuela. Work permits are issued by the Ministry of Labour. On average, it takes 3-4 months to obtain a work permit. Work visas are governed by the Identification, Migration and Foreign Administrative Service (“SAIME”) (“Servicio Administrativo Identificación, Migración y Extranjería”).
There are 7 types of business forms available to foreign companies in Venezuela. Each of these business forms has their own unique characteristics as well as differing scope of business activities, registration requirements and minimum capital requirements.
The following business forms are available to foreign companies:
This article provides a general guideline for foreign businesses that intend to enter Italy for business purposes. In addition, it looks at the tax and regulatory factors that would impact business decisions.
Companies entering Venezuela must make a decision whether to use their own resources for a Do-It-Yourself (DIY) approach, or to use a Global Employment Organization to handle payroll and employment responsibilities. A GEO or Venezuela Employer of Record solution makes it faster, easier and cheaper to deploy staff if they don’t have a Venezuelan entity established that can run payroll.
A DIY approach will typically take 6-9 months until there is a properly incorporated WFOE ready to run payroll and cost up to 6 figures if registered capital is required. Shield GEO can deploy foreign staff in 4-6 weeks and local staff in 48 hours. Additionally Shield GEO is responsible for all compliance issues related to the employment.
|Management Fee for Employer of Record Services / Monthly Payroll Costs||
Please contact us for a quote
Shield GEO pays the employee on a monthly basis, typically on the last working day of the month although we can adapt to your preferred schedule. Income tax and social security (where applicable) are deducted at source and paid to the local tax authorities.
|Tax Returns Supplied||
|Corporate Tax Requirements||
Corporations are required to file tax returns for a 12 month fiscal year ending in December 31. However, a corporation’s first fiscal year may contain less than 12 months. All companies that earn more 1,500 tax units in the preceding fiscal year must file estimated tax returns in the sixth month of the fiscal year. The amount of tax declared in the tax return must be atleast 80% of the preceding year’s taxable income. All corporate tax payers are required to make advance tax payments in six equal instalments.
Final tax returns must be filed within 3 months from the close of the company’s fiscal year and payment of tax liability must be made at that time.
|Employers Social Security and statutory contributions||
Contributions from employers can be 10%, 11%, or 12% of employee’s salary. Social security contributions should be remitted on a monthly basis. Social security contributions are withheld based on the monthly salary capped at VEF 37, 108.4 per month (5 minimum monthly salaries).
|Employees Social Security and statutory contributions||
Employee contribution is 4%. Social security contributions should be remitted on a monthly basis. Social security contributions are withheld based on the monthly salary capped at VEF 37, 108.4 per month (5 minimum monthly salaries).
|Corporate Income Tax Rate||
A resident company domiciled or incorporated in Venezuela must pay corporate tax. Foreign enterprises that conduct business in Venezuela through a permanent establishment (PE) are subject to income tax on foreign and Venezuelan income attributable to the PE.
Corporate tax rates are progressive up to 34%
Corporations with more than 5 employees must contribute 2% of payroll to the National Institute of Educational Corporation.
VAT is based on the invoice price of domestic and imported goods and services. The base rate is 12%. However, an additional rate of 15% applies for luxury goods. Tax payers must obtain a number from the Tax Registry and must update their information once in 3 years. Non-resident enterprises must obtain a tax ID number if it does not have a permanent establishment (PE) in Venezuela. VAT returns must be filed and paid within 15 calendar days following the end of the tax period.
Dividends paid to a resident or a non-resident are tax exempt, except if the dividend distributions exceed the company’s net taxable income. In such cases a 34% WHT rate applies.
Interests paid to non-resident legal entities are taxed at the normal corporate income tax rates (15% to 34%) calculated on 95% of the gross payment based on certain capital requirements. Interest paid to a non-resident individual is subject to 34% WHT. Interest paid to non-resident banks or financial institutions are subject to a WHT of 4.95%.
Royalties paid to a non-resident company or a resident individual are subject to WHT at a maximum rate of 34% calculated on 30% of the gross payment.
Branch remittance tax:
Branch remittance taxes are charged on branch profits of permanent establishments of foreign enterprises at a rate of 34%. Such taxes are deferred if such amounts are re-invested in Venezuela for at least 5 years.
Technical service fees:
Technical service fees paid to a non-resident company or a resident individual is subject to a WHT rate of 34% applied to 30% of the gross payment.
Real Property tax
Real property tax is levied by the local municipalities and varies based on the location of the company.
There is no transfer tax.
Municipalities levy an annual tax on economic activities of companies that are privileged to do business in a particular district. Such taxes vary between 0.5% and 10% depending on the type of business and the district.
Resident and non-resident enterprises that earn more than VEF 15 million must make an annual contribution for science and technology which varies between 0.5% and 2% of gross income.
Additional contributions to capital are levied at 1%.