A law implementing a new net wealth tax in Venezuela was published in the official gazette July 3, with immediate effect.
The tax covers individuals with assets valued at 36 million tax units (approximately $21,000) or more, and legal entities with assets valued at 100 million tax units or more.
The tax rate was set at 0.25 percent but can be increased to as much as 1.5 percent. Progressive rates may be established based on equity value.
Assets and rights will be determined on the basis of ownership as established in public records. If an asset is not subject to registration requirements, it will be attributed to the holder.
In the case of financial leasing by banks and other financial institutions, the leased property will be attributed to the lessee.
In the case of patrimony, the property or possession is presumed to have transferred for the following tax periods at the time the inheritance is declared, unless proved otherwise.
Resident taxpayers are subject to the wealth tax on their global assets (that is, regardless of where the assets are located or the rights may be exercised), and nonresidents are subject to the tax on assets located in Venezuela and any rights that may be exercised there.
If a nonresident has a permanent establishment in Venezuela, the wealth tax will apply to the global assets attributable to the PE. The new law defines a PE to include a construction, installation, or assembly project with a duration in Venezuela of more than three months.
For purposes of the tax, the following assets are considered located in Venezuela:
real estate located in Venezuela;
aircraft, ships, navigation accessories, and motor vehicles that are registered in Venezuela or, if registered abroad, that have remained in Venezuelan territory for at least 120 days during the tax period;
securities and shares issued by Venezuelan companies representing capital stock or the equivalent; and
precious stones, minerals, works of art, and jewelry physically present in Venezuela.
A legal entity is considered resident in Venezuela if it has been constituted in accordance with Venezuelan laws, has its fiscal or statutory domicile in Venezuela, or has its effective management headquarters in the country.
Assets invested in agricultural, livestock, aquaculture, and fishing activities are exempt from the tax if those are the main activities of the taxpayer and they are carried out at the primary level.
The president can grant tax exemptions for specific categories of taxable persons, strategic sectors for foreign investment and national development, and some categories of assets, national bonds, or any other type of security issued by the country or its entities for business purposes. A decree establishing the terms and conditions of the exemptions is forthcoming.
The wealth tax is not considered a deductible expense for corporate income tax purposes.
Slim Gargouri, chartered accountant, Sfax