I.        Legal issues to consider

Foreign investors may lay out their business within Venezuelan territory by two means:

1.          Natural person’s arrival as investor

a)                  Non-resident Business Visa

This kind of visa may be granted to non-migrant dealers and executives, as well as to foreign micro enterprise, company or industry representatives willing to move in to Venezuela and carry out their commercial, mercantile, financial activities and any other profitable legal activity related to thereto. This visa shall be requested in the Consular Sections of Venezuelan Embassies or Ad/Honorem Consular Offices abroad.

Agencies:

Consular Offices, Consular Sections of Venezuelan Embassies or Ad/ Honorem Venezuelan Consular Offices.

Requirements:

1)       Original and copy of passport issued by the corresponding authority and valid for at least six (6) month from the date of visa request.

2)       “Visa Request” Form filled by the interested party or company responsible, stating that the trip is due to commercial, mercantile, financial or any other profitable activity whatsoever. It must include also name, company’s address or address of contact person in Venezuela. Visa Request Form is available at Arrival Department or Consular Office, and must be filled in type or block letter, without obliteration or amendments.

3)       Letter elaborated by the company or interested party, indicating the trip’s motive and that company’s or contact person address in Venezuela.

4)       Two (2) recent ID sized photos (front side, color).

5)       Commercial Registry or equivalent trade document, a Letter from the Association or Chamber of Commerce, or Industry belonging thereto, or any other document requested by the consular officer in order to establish the main trade objective involved.

Proceedings:

1)       Interested party or summoning company must hand in the Request Form and all documents attached therein.

2)       The petitioner shall receive a Certificate issued by the corresponding authority indicating time and date of their request.

3)       Officer responsible for visa’s granting will summon the interested party to a personal interview in order to verify provided information’s verity and compliance to grant aforesaid non-resident business visa.

Paperwork period:

Approximately 78 Hours.

Validity:

Valid for one (1) year, including the right to enter the country many times during it’s effect.  Allowed period of permanence in the country is six months maximum (180 days), without time extensions.

Legal background:

Proceedings Regulation for Visas Issuance (Extraordinary Gazette Nº5.427, dated January 5^th, 2000).

b)      Non-resident Investor Visa

This kind of visa is granted to individuals or company representatives that prove through an evidencing document, that have established contacts and the investment has been accepted by the Official Venezuelan Agencies belonging thereto. This visa must be requested in the Consular Section of Embassies or Consular Offices of the Bolivarian Republic of Venezuela abroad.

This visa has three (3) years period validity, including several entrances to the country, without permanence limit and also extendible for two (2) more years.

Requirements:

1)                  Visa Request Form (given by Consular Office) duly filled.

2)                  Passport valid for at least six (6) months.

3)                  Photostathic copy of Interested Party’s Identification Document

4)                  Two (2) recent ID sized photos (front side, color).

5)                  Job Reference of interested party, attaching  a copy of Identification Document.

Paperwork period:

Eight (8) labor days. If requests are handed in authorized offices in the province of the country then the paperwork period extends to one (1) month.

Legal background:

Proceedings Regulation for Visas Issuance (Official Gazette Nº 5.427, dated January 5^th, 2000).

Note: A job reference containing company’s heading and seal stating services rendered and salary must also be included if the interested party renders his/ her services to any company or agency whatsoever. On the other hand, if services are rendered to a natural person, then a duly certified (Notary’s Office, Registry or Court) job reference or job contract must be handed in. If the interested party is a freelance worker then a Public Certified Statement (Notary’s Office, Registry or Court) must be included.

2.                  Company incorporation

There are different kinds of commercial and civil partnerships in Venezuela, which are regulated by the agreement set forth by each party, the Chamber of Commerce and Civil Code laws.

Partnerships may carry out one or more commercial transactions. Regulations appear in Article N° 201 of Chamber of Commerce’s Code and are classified as General Partnerships (sociedades en nombre colectivo), Limited Partnerships (sociedades en comandita), Corporations (sociedades anónimas) and Limited Liability Companies (sociedades de responsabilidad limitada).

a)       Choosing Partnership Form, or most convenient mercantile association allowed by national regulations. For example, in the case of a Hog’s Stable Assembler the suggested partnership would be a Corporation. Accordingly, Venezuela’s Code of Commerce allows mainly the following partnerships:

·         General Partnerships (Sociedades en Nombre Colectivo – S.N.C.): These Partnerships are the simplest, in which social obligations are guaranteed by the partner’s unlimited and joint liability.  This liability is of subsidiary nature, just as stated in Article N° 228 of the Code of Commerce. Therefore, if Partnership’s creditors proceed against the partners (on their own behalf) to collect their credits, they must first proceed against the Partnership itself. No abstract names are permitted. Only partner’s names may be part of the company’s name, with exception of successor companies which in that case must be presented as such.    

·                     Limited Partnerships (Sociedades en Comandita – S.C.): Obligations of these Partnerships are guaranteed by both, the unlimited and joint liability of one or more partners (who are also called unlimited liability partners) and the limited liability of one or more partners to a specific amount (who are called limited liability partners). The capital of the latter may also be divided into shares, in which case the partnership shall be referred to as a Stock Limited Partnership. The company’s name must necessarily be the name of one or more unlimited liability partners, unless aforesaid company is of successor nature and therefore, must be presented as such. The partners contribute with their own assets, just like the General Partnerships.

·                     Corporations (Sociedades Anónimas – S.A.): social obligations are guaranteed by a certain capital and the shareholders liability is only up to the amount of their contributions. In this case, shareholders responsibility is to the company, rather than to third parties. Regarding third parties, the only entity responsible of social obligation thereof is the company itself.

·                      Limited Liability Companies (Sociedades de Responsabilidad Limitada – S.R.L.): Social obligations are guaranteed by a capital that splits up in participation quotas that under no circumstances are represented through shares or marketable securities.

-                      Corporations and Limited Liability Companies are capital entities, whereby partner’s liabilities are limited against the Partnership itself up to the amount of their contribution. Likewise, the trade name of these Partnerships must refer to an object, an individual or come out of fantasy. Nevertheless, reference to “Corporation (Sociedad Anónima)” (C.A. or S.A.) or “Limited Liability Company (Sociedad de Responsabilidad Limitada)” (S.R.L.) must be added, and written down and duly abbreviated using all the letters.

-                      A common feature belonging to these commercial entities, which characteristics are described in Table Nº 1 reviewed herein, is that they hold a legal nature from the moment of their incorporation, and even before they complete registry proceedings.

Table Nº 1

Commercial entities

b)                  Company’s name: the name of the company must be chosen according to Code of Commerce’s dispositions. The Code of Commerce stipulates that Corporations and Limited Liability Companies names must refer to an object, an individual or come out of fantasy. In any case, “Corporation” (C.A.) or “Limited Liability Company” (S.R.L.) or any other readable abbreviation must be added at the end of chosen name. The Mercantile Register of the jurisdiction belonging to the company’s incorporation location must consider three (3) name choices, in order to select the available one. On the third day after handing in Name Search Request, the interested party must attend to the Mercantile Register to verify name availability and usability. Afterwards, the corresponding proceedings must be made in order to reserve and obtain the name.

c)                  Drawing up Articles of Incorporation and Bylaws: legal counseling thereof is obligatory. Documents must be elaborated and endorsed by an Attorney (lawyer, duly subscribed with Lawyer Social Welfare Institute INPRE[2], member of the Bar Association of the jurisdiction where he / she belongs and with no restrictions for carrying out his/ her profession whatsoever). Articles of Association and Bylaws shall regulate the company’s social and labor relationships in a detailed fashion. They must meet all formalities and requirements stated (for each case) in Articles 211 up to 215 of Venezuela’s Code of Commerce. Incorporation Papers may be granted in a public or private document, and must be written down in sealed paper. When sealed paper is not available, then it must be written down in legal sized paper but leaving sealed paper margins at double space and with a maximum of 30 lines in each page. Requirements needed by legislation for each form of Partnership are:

·   General and Limited Partnerships (Art. 212 Code of Commerce)

·   Identification and address of limited and unlimited liability partners (not only members), that haven’t yet contributed to the joint cash, indicating the nature and time in which these contributions will be made.

·   Company’s name and purpose.

·   Identity of duly authorized partners to proceed and sign on the company’s behalf.

·   Amount of paid and pending securities.

·   Company’s time of incorporation and service period.

·   Company’s equity capital attachment is highly suggested, although the article doesn’t explicitly demand it. 

·   Contributions value and title.

·   Profit distribution and loss support regulations.

·   Corporation and Stock Limited Partnerships (Art. 213 Code of Commerce)

·   Company’s name and address, including address of its offices, branches and representatives.

·   Company’s business nature.

·   Amount of subscribed and stated capital, including paid capital (including corresponding slips attachment).

·   Partners´ Identification and address, including amount and value of shares owned by them expressed in numbers.

·   Credits value and other provided assets.

·   Regulations regarding loss and profit balance sheet, calculations and distribution among partners.

·   Board of Director’s composition and number of members. Likewise, representative activities definition, attributions and any other obligations belonging to each member must be set forth. In the case of Stock Limited Partnerships, the name, surname and address of joint liability partners must be included.

·   Number of Commissioners.

·   In the case of successor Partnerships, include the advantages or particular rights granted to promoters.

·   Stockholders Assembly regulations, especially regarding the validity of their deliberations and their right to vote.

·   Partnership incorporation and period of service.

·   Limited Liability Company (Art. 214 Code of Commerce)

·   Identification, address and nationality of founder partners.

·   Company’s name, address and purpose.

·   Equity capital amount. In this case, 50% of money contributions must be handed in as well as the total amount of contributions in kind. Deposit slips must be attached together with Articles if Incorporation and Bylaws.

·   Include each partner’s amount of subscribed quotes, along with assigned quotes corresponding to money or kind contributions. The latter must include assigned value to such contribution.

·   Number of individuals who will carry out company’s administration and representation.

·   Number of Commissioners if capital exceeds five hundred thousand bolívares (Bs. 500.000).

·   Regulations regarding loss and profit balance sheet elaboration and distribution.

·   Convenient legal agreements and special conditions set forth by partners.

d) Contribution of Minimum Capital demanded: contributions are resources destined to the equity capital whereby company’s assets are created (Article 208 of Code of Commerce). Money is the type of contribution used more often, and the date and amount of such contribution to the capital must be settled. In most cases, there’s a minimum contribution of 20% regarding the assigned Equity Capital’s total amount, with the exception of special cases stipulated by law. Other contributions are:

·   In kind: personal credit or contribution by credit transferring.

·   Contributions in Industry: only allowed among individual’s partnerships, among companies or corporations (capital partnerships), the presence of a capital is always needed.

e)  Signing up in the Mercantile Register: the legislative officer demands that a copy of Articles of Incorporation and Bylaws must be handed in within 15 days following the contract’s formalization. The Register’s in force officer for these proceedings is the one geographically suitable regarding the company’s address. Moreover, the corresponding rates calculated by the Mercantile Register must be paid in order to sign up and it must be deposited at the established Bank. Afterwards, the Mercantile Register’s officer analyzes and reviews said document to verify compliance with all requirements stipulated by law.

f)                   Company’s Registry and Publishing: once the Register’s officer approves the Articles of Incorporation and Bylaws the following steps are ordered to be done:

·   Company’s signing up and File creation. There, all documents produced by the registered Company during its service period will be added.

·   Fixing a document’s copy in the Mercantile Register for a six month period.

·   Publishing must be done within the first 15 days following the of Articles of Incorporation and Bylaws appearance at the Mercantile Register’s Forensic Gazette (Law of Public Registry and Notary’s Office, dated 2006).

·   Company’s sign up period may vary if a commissioning request is done and if corresponding rates according to the case are paid.

3.                  Labor issues

A)     Job Contracts Types

A job contract is a document binding an individual (worker) to render his/ her services to another person (employer) under the subordination of the latter while earning compensation (wage or salary). In Venezuela, a job contract may be done for a definite or indefinite time period.

1. Indefinite time period: this is the most common job contract in Venezuela, where both parties do not limit the job relationship in time or tasks to be performed.

2. Definite time period: this is an exceptional category where the agreement is settled for a fix period. The Organic Law does not necessarily demand this kind of agreements to be written down nor demands that the Official Labor Administration must take part on its formalization. Although there’s an omission in laws, to write down a job contract for a definite time period is strongly suggested. This agreement holds the following limitations:

2.1 Time period: the maximum time period for a definite period job contract is a year for laborers and three years for qualified personnel.

2.2 Nature of Service: the nature of service must justify stipulated conditions or must foresee the contingent substitution of a worker for another, or contracting a Venezuelan worker to render services abroad. These specifications must be set forth clearly in the contract.

2.3 Extension and contract continuity: job contracts for a definite time period will expire at agreement’s completion, although they might extend. Given the case of two or more extensions, the contract will then be considered as indefinite, unless there are justifiable reasons to extend it excluding therefore the possibility to create an indefinite labor relationship. Moreover, is a new agreement is formalized within the first month after the first contract’s completion, it is assumed that both parties agree to be bonded, in a verifiable fashion, by a definite time period contract.

2.4 Specific projects: a contract may establish a project or task to be carried out by worker, allowing the employer to withhold said worker until the project is completed. This contract expires once the project or specific task is completed, even if the greater project containing these specific tasks is already done. With exception of construction contracts, the job relationship then turns into an indefinite time period contract if a new contract’s formalization within the next month after the initial contract completion takes place.

3. Specified Work Contract: Work to be carried out by employer must be explicitly detailed. The contract will be valid for the time period required to perform the work and will expire along with its completion. 

If a new contract is formalized within the next month of a job contract completion for a specified work, then it is understood that both parties are bonded by an indefinite time period from the very beginning of the job relationship. In the case of construction industry, the nature of these contracts for a specified work remains the same despising how many times they are formalized.

4. Job contracts for minors or trainees: there apply the same Job Contract regulations but in this kind of contract the teenager (between 14 and 17) must obtain an authorization from his/ her legal representative or an authorization issued by a judge with capacity regarding children and teenagers. In these circumstances, restrictions for certain kinds of jobs apply, together with a decrease in work schedule and a special trainees’  wage.

1. Differences between a job contract and a service rendering contract:

·   The main difference consists in the relationship between both parties. In a job contract there is a subordination relationship between the employer and worker, but in a service rendering contract there is no subordination between contractor and contracting party.

·   The compensation given for a job is called salary, which holds certain privileges, protections and seniority benefits. On the other hand, in a service rendering contract, the compensation may be agreed before drawing up said contract and may be paid prior to work’s beginning, after the work is done or after each tasks performed depending on the agreement made between involved parties.

·   Another important difference refers to remedies deriving from contract’s non-compliance. Proceeding is regulated in this case by the Organic Labor Law and the Organic Procedural Labor Law.

B)     Job formalization benefits

1. Venezuelan Social Security Institute IVSS, Social Security: Social security law in Venezuela protects its beneficiaries in event of illness, marriage, maternity, disability, old age and payment for involuntary unemployment. Worker and employer must contribute. Venezuelan Social Security Institute administers all mandatory social securities branches.

2. Involuntary Unemployment Security: pursuant to Employment Benefits Law, the Involuntary Unemployment security is a binding contribution that the employer must pay to the worker and it’s calculated out of the worker’s wage’s basis. Contribution percentage is 2,5%. The employer directly pays 2% and the remaining amount 0,5% is subtracted from the worker’s income amounts. These calculations, retentions and contributions are similar to the Social Security.

3. National Institute of Educational Cooperation INCE: The National Institute of Educational Cooperation (INCE) was created out of a special regulation. INCE’s purpose is to provide technical training to workers. Its resources come from the contributions paid quarterly by employers and are equivalent to 2% of wages, salaries or compensations paid to workers laboring in industrial or commercial establishments. This contribution is not mandatory in enterprises with less than 5 workers. Workers contributions are equal to 0,5% of  their contract benefits. This amount is restrained by the employer from the amount paid to workers as benefits. INCE also obligates companies and industrial enterprises to employ and train apprentices from 14 up to 17 years old. Those companies with less than 10 workers are excluded from this obligation.

4. Law on Housing and Housing Benefits: its main purpose is to progressively satisfy the right to live in a decent home and habitat as stipulated by Law on Housing and Housing Benefits, which is part of the Social Security System. This law financing is insured by binding contributions made by both workers and employers. The monthly contribution to this mandatory savings account for each worker’s home shall be 3%. Each worker’s mandatory savings account is constituted by all workers’ savings in a dependency relationship and these include worker’s savings equal to one third (1/3) of monthly contributions and employer’s contributions, from either the public or private sector, to each worker’s account equal to two thirds (2/3) of the monthly contributions.  

5. Worker’s Nutrition Program: Worker’s nutrition law regulates the food benefit to protect and enhance workers nutritional state in order to strengthen their health, prevent occupational illnesses and promote greater job productivity.  Employers from public and private sectors with twenty (20) or more employees must include a balanced and healthy meal in the working schedule. Workers earning more than three times the minimum salary are excluded.

6. Integral Caring of Worker’s Children: Organic Labor Law and its dispositions regulate these benefits for workers. Employers with more than twenty (20) employees must keep a nursery or kinder gardens for their children during working schedule. The number of workers calculated must meet the enterprise’s economical unit. Employers must guarantee this benefit to workers that earn less than five (5) times the minimum salary until their children are five (5) years old.

Note[3]  

C)     Quasi-fiscal Contributions

* Minimum salary (Bs. 879,4) $ 409,02

** Temporary law that will increase up to ten minimum salaries

*** Fourth Paragraph, Article 133 of Organic Labour Law:

 “Article 133: A salary is the compensation, gain or profit, or any other title or calculation thereof, as long as it can be evaluated in cash and corresponds to the worker for his/ her rendered services. It may also include commissions, bonus, gratifications and participation in benefits, supplementary wages, vacation bonus, as well as holidays, extra time or night shift payments, together with home and nutrition benefits…

FOURTH PARAGRAPH.- When both employer and worker are bind to pay a contribution, tax or rate, such amount will be calculated considering the normal salary corresponding to the closest prior month of its event”

D)     Minimum Salary:

·         Minimum salary is stipulated by the President and is usually adjusted in May each year.

·         In effect minimum salary is regulated by Decree N° 5.318, Official Gazette N° 39.153, dated Apr 3^rd, 2009.

·         Unification of minimum salary (among workers and laborers) is currently regulated, with exception of teenagers and trainees (between 14 and 17 years old).

·         Valid salary: Bs. 879,40 (Amended Decree N° 6.660, by which the mandatory minimum salary for workers and laborers that render their services to public or private sectors, is stipulated to be eight hundred seventy nine and forty bolivars -Bs. 879,40- N° 39.153, dated April 3^rd, 2009).

E)     Limitations

In Venezuela there is a limit to the number of foreign workers a company can hire. Article 27 of Organic Labor law contains a main regulation regarding Venezuelan jobmarket opening to foreign workers. This article stipulates that in the case of an employer with ten (10) or more employees, at least ninety percent (90%) of them must be Venezuelan. Moreover, foreign personnel compensation must not exceed twenty (20%) of the total compensation’s amount paid to all employees in all categories.

Article 28 of Organic Labor law states that the Labor Ministry, having first considered overall manpower and specific conditions, may authorize temporary exceptions to the dispositions of the aforesaid article under the following circumstances:

a)                  When there are activities that need special technical qualification and there are no Venezuelan personnel available. The authorization, if applicable, will demand the employer to train Venezuelan personnel within a certain time period.

b)                 When there is a specific manpower demand and the Labor Ministry confirms there are not enough Venezuelan personnel.

c)                  When there are immigrants hired directly by the National Government and controlled by it. In these cases, the authorized percentage and period will be set forth by the corresponding Ministry.

d)                 When there are refugees involved.

e)                  When there small and medium enterprises (PYME) involved.

4.                  Venezuelan Taxation System

1. Income Tax (Income Tax Law, Gaceta Oficial No. 38.628 dated February  16, 2007):

Persons liable to income tax are all individuals and companies resident or domiciled in Venezuela who receive income from whatever origin, regardless of whether the source giving rise to such income is inside or outside the country. All forms of association permitted in Venezuela are subject to this taxation system, including de facto associations and those not incorporated legally. Income tax returns must be filed within three months of the close of the tax year.

            Corporations shall determine their taxable world net income by adding net enrichment from Venezuelan sources to net enrichment from sources outside Venezuela. Total net enrichment is the increase in net worth obtained after subtracting costs and deductions allowed under the Income Tax Law from gross income. Once taxable world net income has been determined, the appropriate tax rate from Tax Rate Schedule No. 2 is applied. This is done by converting the bolivar amount of taxable world net income to Tax Units (TU)*, multiplying the TU amount by the appropriate percentage, and then subtracting the respective subtrahend, as shown in the table.

·         Tax Rate Schedule No. 2

 *Translator’s note: The bolivar amount of the Tax Unit is set each year by the Tax Authorities.

2. Value Added Tax (Law establishing Value Added Tax, Gaceta Oficial No. 38,632, dated February 26, 2007):

Value Added Tax or VAT is a tax levied on the sale of moveable property, the provision of services, and the importing of goods, is applicable throughout Venezuelan territory, and is payable by individuals or corporations, associations, de facto or not legally incorporated partnerships, consortia and other legal or economic entities, whether public or private, that, in their capacity as importers of goods (habitual or not), manufacturers, producers, assemblers, traders, and independent service providers perform activities defined in the law as being taxable.

            The general tax rate applicable to the corresponding taxable base will be set in the Annual Budget Law and will be between 8% (minimum) and 16.5% (maximum). According to the latest amendment to the VAT Law, dated March 26, 2009, the general rate applicable throughout Venezuela is 12% since April 1, 2009.

            In order to determine VAT, the taxpayer deducts or subtracts the amount of any tax credits he is allowed to deduct by law from the amount in tax debits to which he is legally liable for the tax period in question (tax periods for VAT are one calendar month). The tax debit is the amount the taxpayer receives from applying the VAT rate to the value (taxable base) of taxed transactions he conducts, and the tax credit is the amount he pays in VAT when he purchases or imports tangible moveable property or services, provided these are costs, expenses or outgoings having to do with the taxpayer’s habitual business. So, the amount the taxpayer must hand over in tax for each tax period is obtained by subtracting the tax credit as follows:

VAT on sales – VAT on purchases (duly supported) = VAT payable

   (Tax Debit)                                (Tax Credit)

If the amount of tax credits deductible according to this Law is higher than the total of duly adjusted tax debits, the difference will be a tax credit in the ordinary taxpayer’s favor, which will be carried over to the following tax period(s) and will be added to the tax credits of those future tax periods until they have been deducted in full.

3. Organic Law against the Illegal Trafficking and Consumption of Narcotic and Psychotropic Drugs (LOCTICSEP) (Gaceta Oficial No. 5,789 Extraordinario, dated October 26, 2005):

            The chapter of this law on Comprehensive Social Prevention establishes the obligation of all citizens and companies to collaborate with the prevention of the illegal consumption of and crimes involving narcotic or psychotropic drugs. These donations will be used for plans and programs established by the State.

            Private or public entities employing 50 workers or more shall allocate 1% of their annual net earnings to comprehensive social prevention programs against the trafficking and consumption of illegal drugs for their workers and families, and 0.5% of this percentage shall be allocated to comprehensive programs for the protection of children and adolescents. Failure to comply with this obligation will be sanctioned with a fine of 60,000 tax units; repeat offenses will be sanctioned with the suspension of business activities for a period of one year.

4. Organic Law on Science, Technology and Innovation (LOCTI) (Gaceta Oficial No. 38.242  dated July 30, 2005):

The Science and Technology and innovation ruled by this law, establishes three special cases:

a) Mayor companies of the Hydrocarbon and Gas Sector must contribute with an annual payment of 2% out of the gross income obtained within the national territory

b) Mayor companies of the Mining and Electric sector must contribute with an annual payment of 1% out of the gross income obtained within the national territory

c) Mayor companies from other sectors, that produce goods and services must contribute with an annual payment of 0,5% out of the gross income obtained within the  national territory.

Mayor companies, receptor of foreign investments, must carried out the contribution according to each case, depending on the corresponding Branch of business developed by them. (Mayor Companies: is a company that has a gross income above 100.000 Unit Tax. Art. 44 of the Science, Technology and Innovation Law

5.Municipal taxes:

Constitutionally, municipal revenues come mainly from: charges for the use of the municipality’s goods or services; administrative charges for licenses or permits; taxes on the economic activities of industry, commerce, and the service sector; taxes on urban real estate, vehicles, public entertainment, legal gaming and betting, and propaganda and commercial advertising. Municipal taxes vary depending on the municipality and are set and regulated by the corresponding municipal ordinances.

Summary Table

II.      Steps for a company’s registration

1.                  Obtaining a visa

See Chapter I, point 1

2.                  Company incorporation

See Chapter I, point 2

3.                  Obtaining the Tax Information Registry in the National Integrated Service for Customs and Tax Administration (SENIAT)

Tax Information Registry (R.I.F.) is a mechanism created to control taxes of legal persons, whose activities or assets may be subject to income tax as long as the source of enrichment is located or happens in Venezuela.

The R.I.F. number assigned to an individual shall be unique, personal, permanent, exclusive, excluding, and holds mandatory use in documents, request, proceedings or demands handed in or carried out in SENIAT. It must also appear in every statement, bill, slip or any other similar document issued by contributor whatsoever.

In order to sign up in the Contributors Register R.I.F., legal persons must hand in the R.I.F Section of the Domestic Taxes’ Regional Management with jurisdiction over their tax address both original and copy of the following requirements:

·                    NIT-J-15 Form duly filled (only original).

·                    Articles of Incorporation and Bylaws, and last Assembly records where the valid Board of Director designation appears duly published and registered.

·                    Power of Attorney of Legal Representative (only when is not clearly specified in Articles of Incorporation and Bylaws).

·                    Identification Document or Passport of Legal Representative.

4.                  Foreign Investment Registry in the Office of the Superintendent of Foreign Investments – SIEX

Foreign investments do not need a prior authorization but a subsequent registry that must be requested within sixty (60) continuous days after the date of correspondent Commercial Registry that generated the investment. 

Profit obtained by foreign investors may be send abroad in its totality without any limitations or income taxes whatsoever, prior the compliance of all CADIVI dispositions about foreign currency acquiring.

INVESTMENT METHODS:

·                    Foreign currency: free foreign currency investment that may be turned into contribution in a company’s capital.

·                    Tangible property: industrial production facilities, machines, equipment, parts, raw material and semi manufactured products.

·                    Credits Capitalizing: amount coming from a credit operation, technological claims or from received and non-paid licenses.

·                    Investment in Domestic Currency: investments and re-investments, investments generated from Stock, Shares or Rights Sales.

·                    Intangible Technological Contributions: trademarks, industrial models, technical assistance and qualification, either patented or unpatented.

·                    Conversion of External Public Debt into Investment

REQUISITES

Direct Foreign Investment registry must be requested through a paper with the following attached requirements:

a)                  Investment slip according to used method:

·                       Evidence that foreign currency entered the country

·                       Tangible property slips or intangible technological contributions value destined to equity capital.

·                       In the case that Direct Foreign Investment is carried out through Credits capitalizing, SIEX must verify capitalized credit existence.

·                       In the case that Direct Foreign Investment is carried out through Conversion of External Public Debt into Investment Credits capitalizing, the following requirements are needed:

-                   Trust copy

-                   Credits transferal contract

-                   Slip of funds transferal from BCV[4] to the Trust, considering Investment Project Disbursement Plan

b)                 Foreign Investor’s Articles of Incorporation and Bylaws (if investor is a legal person) translated into Spanish by a public translator, duly legalized or authenticated before Venezuela’s Consulate at the county of origin.

c)                  Power of Attorney empowering Foreign Investor representative.

d)                 Classification of Local Company* receiving Direct Foreign Investment.

e)                  Requests must be presented in the Information and Correspondence Office at the Superintendent of Foreign Investments. To verify rates pursuant to these proceedings, this website must be visited: www.siex.gov.ve

·                       Local Company Classification

The condition of National, Mixed or Foreign Company is supported by the Local Company Classification statement offered by the Superintendent of Foreign Investments.

·        National Company: foreign capital less than 20%

·        Mixed Company: foreign capital between 20% and 49%

·        Foreign Company: foreign capital of more than 49%

Likewise, aforesaid capital must be reflected in technical, commercial, administrative and finance management of the company.

If a mixed company invests on a local company, the national and foreign portions of the investor company’s capital shall be calculated in order to determine the local company classification.

REQUISITES:

SIEX-12 Form, or a paper whether such form is not available, shall be used to request a Company Classification Statement including the following documents:

a)                  Company’s Articles of Incorporation and Bylaws duly registered or their publication.

b)                 Shareholder’s Meetings minutes where modifications of legal dispositions –if there are any- are duly recorded.

c)                  Given the case of company’s who’s Shareholders are legal persons; a valid Local Company Classification Statement issued by Superintendent of Foreign Investments must be included.

d)                 Copy of Official Gazette containing the Decree of Naturalization of Shareholders that obtained Venezuelan nationality, or copy their Identification document.

e)                  Photostatic copy of Shareholder’s Book certified by a member of the Board of Directors. All shares’ transferal being done up to that date appear.

f)                   R.I.F. copy.

g)                 Requests must be presented in the Information and Correspondence Office at the Superintendent of Foreign Investments. To verify rates pursuant to these proceedings, this website must be visited: www.siex.gov.ve

Notes:

-                   If the company’s representative doesn’t belong to the Board of Directors, then a copy of the Power of Attorney that empowers him/her must be included.

-                   Those documents already submitted in the opportunity of a prior request may be omitted, but the company’s file number given at that time by the Superintendent must be indicated.

5.                  Company’s registration in the Venezuelan Social Security Institute (IVSS)

All companies employing at least one (1) worker must be enrolled with the IVSS. Companies may sign up with the Mandatory Social Security through a legal representative, in Regional Funds or IVSS Administrative Offices located countrywide.

·        Request Form: 14-01 at the Regional Fund and Form: 14-02. Both of these must be fulfilled and issued the original together with two copies.

·        Copy of Commercial Registry.

·        Copy of Company’s R.I.F.

·        Copy of CANTV[5]/ electricity bill containing company’s address.

Form: 14-01

Four (4) copies together with the following documents must be presented in the Administrative Office:

·        Copy of Commercial Registry or Mercantile Official Gazette.

·        Copy of property ownership document or rent where company is located.

·        Phone or electricity bill where the name of persons requesting subscription appears.

·        Last income tax statement (minimum three years).

·        Copy of legal representative Identification document.

·        Copy of Tax Information Registry R.I.F.

·        Social Security Solvency (if the company has been subscribed with the Mercantile Registry for more than one year).

·        Original and two copies (F: 14-02) of Insured Register (for each active worker to be signed up).

Form: 14-02

The Insured Register allows worker subscription to Mandatory Social Security, as well as their qualified relatives according to Social Security laws.

Employer must carry out workers enrollment within three (3) days subsequent to the job relationship commencement. Given the case that the employer doesn’t enroll said worker, he or she must fulfill and hand in this form in the Administrative Office his or herself with the corresponding documents proving the job relationship with the employer and then enrollment may be completed.

The Administrative Office belonging thereto will demand the documents or requirements at Form’s presentation. The maximum time period to hand in the documents attaching copy of identification document and form 14-01, is three (3) labor days. 

Four (4) copies of Form 14-02 must be presented before the Administrative Office, together with a copy of identification document and Form 14-01. Likewise, a copy of the following document must be attached thereto:

a)               Incorporation of a non-member worker:

-              Copy of worker’s Identification Document.

-              Job reference signed by employer

-              Copy of employers Identification Document

b)               Modification of worker information

-              Service card.

-             Copy of Identification Document.

-             Copy of Certificate of Marriage or Divorce Certificate.

c)               Reports of worker relatives

-              Children: birth certificate, acknowledge or adoption certificate.

-              Wife: marriage certificate and copy of wife’s identification card.

-              Mother/ Father: birth certificate of insured party or filiation data, and copy of identification document of father and /or mother.

6.                  Company’s signing up in the National Institute for Educational Cooperation (INCE)

Contribution for the National Institute for Educational Cooperation (INCE) is a mandatory quasi-fiscal contribution for both workers and employers and is regulated by the laws stipulated by aforesaid Institute (1970). Title IV, Chapter 11, Article 145 of Tax Organic Code, sets forth the contributor’s formal rights: subscribing with the Registries belonging thereto, report necessary information and to communicate modifications in due time. 

Subscription must be carried out before INCE’s Tax Income Unit, where tax domicile or contributor’s establishment is located.

Requirements needed to subscribe a Company with the INCE

1)                  Original and copy of RIF.

2)                  Original and copy of Mercantile Registry’s complete address (original shall be returned immediately).

3)                  Document addressed to Institute containing the following information:

-       Phone number.

-       Zip code.

-       Number of workers (is necessary to report if the company is currently active or not, or if it employs or not some workers).

-       R.I.F. number.

-       Social Security number (if applicable).

III.    Labor Solvency

Labor Solvency is an administrative document issued by the Labor Ministry and it certifies that the employer’s meet their employee’s labor and worker unions’ human rights. This is a mandatory requirement to formalize contracts and agreements with the State.

Steps needed to obtain Labor Solvency:

A.                 National Registry of Enterprises and Establishments:

National Register of Enterprises and Establishments (RNEE) objective is to consolidate and centralize all local company and establishments’ information regarding labor and social security issues. The following steps must be made:

1.                  Entering the System: register as a New Registry User at website www.mintra.com and assign a password to insure access to the registration.

2.                  Fill Company’s Registry Request Form: all information required by the system must be introduced (Instructions). The user may access the system as many times as needed to complete request.

3.                  Request an appointment: after filling the request, the “Appointment Request” choice must be clicked form the menu. Then appointment’s location, date and time to present all the requirements is shown.

4.                  Requirements handing in: at the Register’s Office belonging thereto:

a)                 Two (2) copies of Subscription Request.

b)                 Copy of Articles of Incorporation, last bylaws modification and valid Board of Director’s designation.

c)                 Tax Information Registry (RIF).

d)                 Copy of Tax Identification Number (NIT), if applicable.

e)                 “Company’s or Employer’s Certificate” (Form 14-01) issued by the the Venezuelan Institute of Social Security (IVSS), or a “Non-member Statement” from both, requestor and branches.

f)                  Subscription slip of National Contributors Registry (RNA) and conducted by National Institute of Educational Cooperation (INCE), if applicable.

g)                 “Mandatory Savings’ on Housing Funds Membership” issued by the bank or enterprise’s Mandatory Savings’ on Housing Funds Non-Membership Statement issued by National Counsel in Housing (CONAVI).

h)                 Workers pay sheet printed and issued in the corresponding form, as stipulated in Labor Ministry’s website: www.mintra.gov.ve.

5. Subscription Certificate Retrieval: the officer shall verify presented requirements and request’s information and shall provide a Labor Identification Number (NIL) to the company’s representative. This is the document that certifies company’s duly subscription with the Labor Ministry.

B.                 Labor Solvency Request

The company must obtain certificates issued by INCE and CONAVI before requesting Labor Solvency, because such requirements are verified during these proceedings.

1.                  Requirements to request INCE’s Solvency

§        Solvency request (Internet Form)

§        Photostatic copy of National Contributor’s Registry– RNA Subscription slips issued by INCE.

§        Original and copy of Tax Income Statement showing the bank engraving identification from the latest six years.

§        Original and copy of deposit slips of 2% and ½% if said company has 5 or more workers from the latest six years.

§        Original and copy from updated Accounting Day Book of the end of each quarter and also the first page thereof.

§        Original and copy of the National Training Program Fulfillment Certificate – PNA for enterprises with more than 10 workers employed issued by the Regional INCE Management belonging thereto.

§        Legal representative authorization.

§        Copy of legal representative’s I.D.

§        Copy of empowered representative’s I.D.

§        If company was subject to an INCE taxation and this entity presented a remedy, then an original and copy thereof must be presented.

2.                  Requirements to request CONAVI Solvency:

§                    Solvency request form (2 copies).

§                    NIL Copy, or the last employment and labored hours statement sealed by MINTRA.

§                    Original of Mandatory Savings’ on Housing Funds Membership issued, signed and sealed by the bank.

§                    Copy of RIF.

§                    Copy of Articles of Incorporation and Bylaws.

§                    Copy of both sides of ISRL[6] statements (DPJ-26), from the year 2000 up to the date.

§                    Original and copy of last five deposit slips paid to FAOV[7].

§                    CONAVI may demand any other requirement whatsoever that allows to verify the meeting of obligations regarding FAOV (from the beginning of company’s services).

3.                  Proceedings to request Labor Solvency

§                    Fill available request at website: www.mintra.gov.ve.

§                    Indicate previous solvency information granted by INCE and CONAVI.

§                    MINTRA shall spend 5 labor days to approve or reject Solvency. If Solvency is approved, the company must deliver a duly signed printed request format when retrieving aforesaid document for the Labor Inspector’s Office.

§                    Prior Solvency issuance, MINTRA must confirm that the company complies with Social Security System’s obligations and therefore will enquire the competent entities.