Income tax in Venezuela
Taxation Researcher | January 11, 2020
Residents are taxed on their worldwide income. Residents are those individuals who spend more than 183 days continuous or discontinuous in Venezuela throughout a given calendar year or the previous year.
Married couples are required to file a joint income tax return but the wife may choose to report employment or professional income separately.
The tax administration is the Servicio Nacional Integrado de Administración Aduanera y Tributaria (SENIAT).
Taxable income includes: (1) business income, (2) employment income, (3) capital gains, (4) investment income, and (5) other income.
The taxation of residents in Venezuela is in tax units (unidadestributarias, TU), which is an adjustment index, whose monetary value changes depending in the annual inflation. The tax unit or TU (unitariatributaria) for 2018 is VEF500 (US$0.0038). The tax unit or TU (unitariatributaria) for 2017 is VEF300 (US$0.0038).
Income tax is levied at progressive rates.
|TAX UNITS, TU||TAX RATE|
|Up to 1,000||6%|
|1,000 - 1,500||9%|
|1,500 - 2,000||12%|
|2,000 - 2,500||16%|
|2,500 - 3,000||20%|
|3,000 - 4,000||24%|
|4,000 - 6,000||29%|
|Source: Global Property Guide|
Residents are entitled to some allowances and tax credits.
Rental income earned by resident individuals is taxed at progressive rates. The taxable income is computed by deducting actually incurred costs from the gross income. Allowable deductions are administrative expenses (maximum of 10% of gross income), repairs and maintenance, insurance, real estate tax, and municipal tax. Cost-of-purchase depreciation (capital allowance) is not deductible.
Rental income is subject to withholding tax levied at 3%. This may be credited against the final income tax liability.
Capital gains realized from selling property are treated as ordinary income and taxed at progressive income tax rates. The taxable gain is computed by deducting the costs (acquisition costs, improvement costs, and registration duties) from the gross selling price.
Capital gains realized from a resident´s main dwelling are not subject to tax provided that the property is duly registered, the transaction is reported, and receipts are invested in a new residence that is also duly registered.
VALUE ADDED TAX (VAT)
In Venezuela, the value added tax on renting property will only be paid when the lease is intended for non-residential purposes. The collection must be made by the landlord.
Land Registry or Real Estate Tax (Impuestos a los Inmuebles Urbanos)
Real estate tax is a local tax levied on the real estate property. Each municipality sets its own calculation measures for the tax base and the tax rate. The property owner is responsible for paying the real estate taxes.
Historically, the value of the property, its productivity or the effective income derived from it was considered as the tax base. The actual tax base applicable depends on the municipality.
The taxation of companies in Venezuela is in tax units (unidadestributarias, TU), which is an adjustment index, whose monetary value changes depending in the annual inflation. The tax unit or TU (unitariatributaria) for 2018 is VEF500 (US$0.0038). The tax unit or TU (unitariatributaria) for 2017 is VEF300 (US$0.0038).
Income and capital gains earned by companies is taxed progressive rates. Income-generating expenses are deductible when calculating taxable income.
|Up to 2,000||15%|
|2,000 - 3,000||22%|