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The consumer

Consumer Profile
Despite being a country rich in natural resources, the political and economic situation has been deteriorating dramatically in recent years.
Since early 2014, public frustration has been steadily rising over shortages of basic consumer goods and skyrocketing inflation. The country’s GDP is expected to contract 10% in 2021, after shrinking an estimated 30% in 2020 (IMF). The increase in poverty, food shortages, inflation, and insecurity was undeniable, to the point of surpassing all the previous forecasts. Inflation is out of control: it worsened in 2020 reaching 6,500% (IMF).
According to the results of a Survey on Living Conditions (ENCOVI) carried out by the main universities of the country, starving Venezuelans lost on average more than 11 kilos during 2017. In 2020, 94% of respondents said that family income is not sufficient to cover the cost of living and 80% said that they received food assistance. According to the same survey, 96% of Venezuelan households are now living in poverty (2020). It also notes that extreme poverty was 13% lower in 2018.
The report on the global state of food security and nutrition of FAO detailed that Venezuelans are experiencing the highest rate of malnutrition in recent years.
Consumer Behaviour
Venezuelans are experiencing a dramatic economic and social crisis, with a shortage of basic products and hyperinflation. The informal market has now become predominant, and the Survey on Living Conditions estimated that the informal economy absorbs 45% of employment (Encovi 2019-2020).
Due to the situation, many foreign companies decided to cease operations in Venezuela, while the devaluation of the national currency made it practically impossible to import goods from abroad. In turn, stores’ shelves are getting more and more counterfeited products, mainly of Chinese origin.
The crisis in Venezuela has also degraded society to the point of becoming the most violent country in Latin America, with a homicide rate of 60.3 per 100,000 inhabitants (the highest in the world) in 2020 according to the NGO Observatorio Venezolano de la Violencia (OVV).
Due to the abovementioned factors, shopping habits have changed, focusing nowadays mostly on day-to-day grocery shopping.
Consumers Associations
Consumid.org (Consumers' Portal)
Defiendete (Federation of Consumer Associations)
National Consumer Alliance
 

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Importing & Distributing

Import Procedures
Venezuelan Customs requires that all documents are in Spanish.  The invoice must be the typewritten original, not a photocopy.  The manifest of importation and declaration of value (bill of lading) must be in quadruplicate.
The following documents are required:  commercial invoice; bill of lading or airway bill; packing list; certificate of origin; and special certificates or permits when required (e.g., phytosanitary or quality standards certificates). Exporters should consult with the Venezuelan importer regarding what documentation is required in addition to the invoice.

Exporters should quote CIF and Free on Board (FOB) prices for Venezuela.  Insurance and freight must be listed separately on the invoice. The invoice must be in duplicate and list both the value per unit and the total value of the shipment. The description of the merchandise must include the appropriate tariff number, which the importer can supply. To simplify the import process for a large amount of cargo for one project, there should be a single declaration for all items, and each item should be then listed separately with its respective tariff number.
Some Venezuelan importers engage in over-invoicing to acquire foreign currency at the official exchange rate. This is illegal under Venezuelan law.

Exporters are encouraged to follow the instructions of the importer and, for products requiring registration (food, pharmaceuticals, perfume), to ensure that the steps have been taken prior to shipment. Overall, the procedures are rather slow and the Venezuelan importer has to provide a number of documents by cooperating with the exporter.

For more information, please visit the Venezuelan Customs website.
Distribution market players
Venezuela's mass retail network consists of the following:

  • 333 hypermarkets and supermarkets that are part of chain stores
  • 6,030 independent supermarkets
  • 8,312 pharmacies
  • 12,460 beverage retailers
  • 136,906 neighborhood grocery stores


The main chains are Makro (35 stores) and San Diego (19 stores) in the hypermarket field as well as Central Madeirense (57 stores) and Excelsior Gamma (26 stores) for super and hypermarkets.

(Source: ANSA, 2019 - latest data available)

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Operating a Business

Type of companies

Sociedad de Responsabilidad Limitada (SRL) is a Private Limited Company.
Number of partners: Minimum 2 partners.
Capital (max/min): No minimum capital required. To be entirely subscribed.
Shareholders and liability: Liability is limited to the amount of capital contributed.
Sociedad Anonima (SA) is a Public Limited Company.
Number of partners: Minimum 2 partners.
Capital (max/min): No minimum capital required. To be entirely subscribed.
Shareholders and liability: Liability is limited to the amount of capital contributed.
General Partnership
Number of partners: Minimum 2 partners.
Capital (max/min): No minimum capital required.
Shareholders and liability: Joint and several liability.
Limited Partnership
Number of partners: Minimum 2 partners, one managing partner and one silent partner.
Capital (max/min): No minimum capital required.
Shareholders and liability: Joint and several liability for managing partners, limited to the contributions for silent partners.
 
Setting Up a Company Venezuela Latin America & Caribbean
Procedures (number) 20.0 8.0
Time (days) 230.0 25.2

Source: Doing Business - Latest available data.

 

Cost of Labour

Minimum Wage
In 2021, the minimum wage is VEF 1,200,000 per month according to the Central Bank of Venezuela.

NB: Venezuela has seen record inflation rates since 2013, which affected wages. In addition, the granting of a minimum wage is now accompanied by food stamps.

Average Wage
The average wage was between USD 0.80 and USD 8 per month in 2020, according to the Venezuelan newspaper El Nacional.
The Central Bank of Venezuela has not released any other data on the average wage since 2012.
Social Contributions
Social Security Contributions Paid By Employers: Between 9% and 11% of wages for the compulsory social security scheme.
Social Security Contributions Paid By Employees: 4% of the gross wage for the complusory social security scheme.
 

Intellectual Property

National Organisations
Venezuela is a member of the Paris Convention (industrial property) and of the Berne Convention (authors copyrights). It is however very difficult to implement control in this country, to protect patents, trademarks, designs etc... It is therefore preferable to register these goods and services within the country. It should also be noted that the country is not a signatory to the Rome Convention (which deals with the protection of artists and interpreters). For more information, please consult the SAPI: Service Autonome de la Propriété Intellectuelle.
Regional Organisations
Venezuela is a member of WIPO (World Intellectual Property Organization) and a member of the WTO. For more information contact the Ministry of Justice.
 

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Tax Rates

Consumption Taxes

Nature of the Tax
Value-added tax (VAT) - Impuesto al valor agregado (IVA)
Tax Rate
Standard rate: currently 16% (may change every year, ranging from 8% to 16.5%).
15% additional rate on certain luxury goods, including vehicles and jewellery.
Reduced Tax Rate
Exempted goods and services include: food and goods for personal consumption such as bread, rice, salt, sugar, coffee, milk, pasta and margarine; books, newspapers and magazines; education provided by institutions registered in the Ministry of Education, Culture and Sports and the Ministry of Superior Education; public transportation of passengers by land or sea; tickets to national parks, museums and cultural centers; banking and insurance services; imports made by diplomatic agents, in accordance with international treaties subscribed to by Venezuela; medical assistance services; residential electricity; fertilizers.

Exports of tangible personal property and tangible movable property and exports of services are zero-rated.

The 15% additional rate applies to: membership and maintenance fees of restaurants, nightclubs and bars with restricted access; the rental of ships or aircraft for civilians, among others, for recreational activities or sports; services provided by third parties through text messaging or other technological means; cars imported or manufactured in the country with a value equal to or higher than USD40,000; motorcycles imported or manufactured in the country with a value equal to or higher than USD20,000; airplanes used for exhibitions, advertisement, recreation or sports purposes; ships and vessels for recreation and sports purposes, or for the particular use of its owner; gaming machines that use coins or cards caviar; lease of ships for recreation and sports purposes or airplanes used for exhibitions, advertisement, recreation or sports purposes; services rendered on behalf of third parties, through text messages or other technological means.

Other Consumption Taxes
The import and national production of cigarettes and tobacco (proportional tax levied at a rate of 70% on the retail price of cigarettes, tobacco, and its derivates) and the commercialisation and import of alcohol and alcoholic beverages into Venezuela are subject to excise taxes.
 

Corporate Taxes

Company Tax
Progressive rate up to 34%. The system of levy is expressed in tax units (unidad tributaria) that specify tax rates. The value of a tax unit is 1.500 sovereign bolivars in 2020.
Capital Gains Taxation
Capital gains are taxed as ordinary income at the corporate tax rate, while capital losses are deductible from ordinary income. Gains arising from the sale of shares registered on the Venezuelan stock exchange are subject to a 1% tax on the gross proceeds.
Gains upon liquidation or reduction of capital are taxable to the liquidating entity.
Main Allowable Deductions and Tax Credits
Depreciation of tangible and intangible assets (used to generate income) is tax-deductible. Goodwill can be generally amortised for tax purposes whereas depreciation of real estate used as rental property is not tax-deductible (same as for fines and penalties).
The current tax code does not include any provisions for the deduction of start-up costs.
Interest charges and bad debts (for loans that are part of the main business activity and were initially included in its gross income) are tax-deductible.
Donations to charitable organisations are deductible up to 10% of taxable income. This rate is reduced to 8% for companies with taxable income over UT 10,000 (tax unit, "unidad tributaria" in Spanish). The deduction is limited to 1% of the amount of tax due for oil extraction companies.
Payments imposed on the employer by the Labour Code - such as profit distribution or severance pay - are generally deductible.

Tax losses can be carried forward for up to three years. For each of these years, the amount of tax losses to be carried forward cannot exceed 25% of the tax due in a given year. The carryback of losses is not permitted. Furthermore, foreign tax losses can only be offset against profits earned abroad.
Other Corporate Taxes
Social security contributions payable by the employer could amount to 10%, 11% or 12% of salary, with rates varying according to the risk associated with the employee's work (capped at five minimum salaries). Employers also pay an amount equal to 2% of the salary for the unemployment insurance system (up to ten minimum salaries), and 2% of the salary for each of the housing assistance scheme and the training of the employee. Furthermore, employers contribute under the Organic Law on Prevention, Working Conditions and Working Environment (LOPCYMAT) at rates varying between 0.75% and 10% depending on the type of work.

Municipal authorities levy a tax on professional activities of the firm at rates varying between 0.1% and 10% depending on the location and the type of activity. A municipal tax is levied on real estate at variable rates.

Companies with a certain level of income or employees are liable for additional taxes: companies with an annual gross income exceeding 10,000 UT pay a fee under the Science, Technology and Innovation Act (LOCTI) at rates varying between 0.5%, 1% and 2% of gross income depending on the type of activity. They also contribute 1% of gross income under the Sports and Physical Activity Act if their annual gross income exceeds 20,000 UT. Finally, companies with 50 employees or more pay a contribution of 1% of gross revenue (2% for companies involved in the production or import of alcoholic beverages and tobacco as a contribution to anti-drug operations) to the National Antidrug Fund.

There are several stamp duties on the issuance of official documents ranging from 0.01 UT to 10,000 UT. Companies designated as "special taxpayers" are also liable for a 2% tax on the total bank debit or taxable transaction.

Capital duty amounts to 1% of capital (2% in the Capital District), while the sale of an active business is subject to a tax of 2% of its value. An inheritance/gift tax is applicable at rates up to 55%.

Under the Hydrocarbons Organic Law, the state is entitled to 30% of the volume of hydrocarbons extracted from any deposit, by way of royalties, while for the Gaseous Hydrocarbons Organic Law the royalty is equal to 20%. Furthermore, 10% of the value of each cubic metre of hydrocarbon by-products produced and consumed as fuel in wholly-owned operations, based on the price of the end consumer, is due as a tax
Sound and television broadcasting are subject to a 1% levy, whereas other telecommunication services are subject to a 2.3% rate (plus several other contributions).

Taxpayers whose net equity (for companies) exceeds 150 million TUs are subject to a wealth tax at 0.25% of total equity.

Other Domestic Resources
SENIAT
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
See the list of conventions signed by Venezuela.
Withholding Taxes
Dividends: 0 (standard rate)/34% (if dividend distributions exceed the payer company’s net taxed income)
Interest: 0 (resident individual)/4.95% (paid to non-resident banks or financial institutions)/standard progressive CIT rates of 15%, 22%, and 34% (applies to 95% of interests, the remaining amount is exempt - thus the effective rates are 14.25%, 20.9%, and 32.3%)/ 34% (resident companies and non-resident individuals)
Royalties: 0 (residents)/34% (applies to 90% of royalties paid, thus the effective rate is 30.6%).

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