Venezuela - Taxation

Almost all forms of taxation are the responsibility of the federal government; it apportions federal tax revenue to the states, which, in turn, allocate a portion to the municipalities. Cities may levy taxes on such items as water and other municipal services and the exploitation of community lands.

Corporate income is taxed according to a schedule with three brackets—15%, 22% and 34%—except for that derived from the hydrocarbons industry. The effective rate depends on the applicability of a 10% investment tax credit for investment in fixed assets. Exemptions are available for income from new industries or from agriculture, livestock, reforestation, and fishing. In 2002, corporations engaged in the hydrocarbons industry were taxed at a flat rate of 50%, down from 67.7% previously. There are also municipal business taxes ranging from0.3% to 9.4% depending on location and business activity involved. Capital gains are considered as part of corporate income. Dividends for oil companies are taxed at 67.7% and for mining companies at 60%. Dividends from other companies are taxed at 34%. There are also corporate registration fees and a 1% business assets tax.

The basic personal income tax schedule is progressive and contains eight brackets ranging from 6% to 34%. On payments due to nonresidents, technical aid is taxed at 10.2%, technical services at 17% and professional services at 30.6%. Salaries, premiums, and other sources of income for nonresidents are taxed at 34%. There are also inheritance and gift taxes, and a real estate tax.

A value-added tax (VAT) became effective in 1993 and since September 2002 has been levied at a standard rate of 16%. There are also entertainment and advertising taxes (in the Federal District), and minor excise taxes on liquor, tobacco, cigarettes, and petroleum products.