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Venezuela
Venezuelan tax changes affect individuals
Executive summary
The Government under Special Powers given
by the Congress published several Decrees
in a Special Official Gazette N 6,152 dated
18 November 2014. Among other changes,
the Decrees (numbers 1,435, 1,434 and 1,436)
enact reforms to the Income Tax Law affecting
the definition of taxable employment income,
to the Master Tax Code affecting the statute
of limitations for assessment of tax and
penalties and to the Value Added Tax
affecting rate and administration of the tax.
The reforms
Reform of Article 31Employment and other
income:
Article 31: Net income includes all
compensation or profit, regular and
accidental, that individuals receive for
their employment, regardless of the
nature of the income, other than travel
allowances and food bonuses.
Additionally net income includes
interest from loans and other credit
granted from foreign financial
institutions that are not domiciled in
Venezuela, as well as income from
shares with progressive taxation
established in this law.
In addition, under the replacement of Article 247 with Article 257 of the Master
Tax Code, the lodging of appeals against assessed fines or other actions taken by
the Tax Authority will not affect the Tax Authoritys ability to enforce the fines or
other actions. However, the taxpayer may request in writing a suspension if
enforcement of the aforementioned acts causes serious harm.
Reform of Articles 27, 33 and 57 of the Value Added Tax lawRate of tax and
administrative matters
Reform of Article 27 of the Value Added Tax establishes that the National
Executive can set and modify the general tax rate applicable to the tax base
between 8% and 16.5%. Modification of Article 33 establishes that a tax credit
cannot be claimed after twelve tax periods from the date of issuance of the
invoice. Article 57 establishes that electronic invoicing is mandatory.
Implications
With these tax changes, income tax will now be assessed on non-regular
employment income, such as allowances, bonuses and equity awards. Interest
income from non-Venezuelan financial institutions will also be subject to tax.
The tax authorities now have a longer period of time during which to assess and
collect tax and penalties, and appear to have more enforcement power than in
the past.
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