LAW OF PARTIAL AMENDMENT TO THE LAW OF TAX ON LARGE FINANCIAL TRANSACTIONS - February 25 2022

LAW OF PARTIAL AMENDMENT TO THE LAW OF TAX ON LARGE FINANCIAL TRANSACTIONS

The Law of Partial Amendment to the Decree with the Status, Value, and Force of Law of Tax on Large Financial Transactions, issued by the National Assembly, was published in Official Gazette No. 6.687 Extraordinary of February 25, 2022 (the “Law of Partial Amendment to the TLFT”).

Among the most significant changes, the Law of Partial Amendment to the TLFT establishes the following modifications:

Taxpayers

Natural persons, legal persons, and unincorporated economic entities were included as new taxpayers of the Tax on Large Financial Transactions (“TLFT”) for the payments made:

1. In a currency other than the legal currency of the country or in cryptocurrencies or cryptoassets other than those issued by the Republic, within the national banking system, without the intervention of a foreign correspondent bank, according to the policies established by the Venezuelan Central Bank (“VCB”).
2. To persons categorized as special taxpayers, in a currency other than the legal currency of the country or in cryptocurrencies or cryptoassets other than those issued by the Republic, without the intervention of financial institutions.

Exemptions

Number 4 of article 8 establishes a new exemption according to which foreign exchange transactions made by a duly authorized exchange operator are exempt from payment of the TLFT. The rest of the exemptions previously established in the Law remain.

In addition, it is prescribed that the exemptions prescribed in numbers 5 through 11 of the Law of Partial Amendment to the TLFT apply exclusively to transactions made in legal currency or in cryptocurrencies or cryptoassets issued by the Republic.

Tax Rate

Regarding the tax rate applicable to the taxable base, article 13 of the Law was modified. According to the “Constituent Decree that Amends the Decree with the Status, Value, and Force of Law of Tax on Large Financial Transactions”, issued on August 17, 2018 and published in Official Gazette No. 6.396 of August 21, 2018, the tax rate ranged between a minimum limit of 0% and a maximum limit of 2%. Now, it is established as follows, according to what the National Executive establishes:

1. A minimum limit of 0% and a maximum of 2%, except for the transactions made by the taxpayers indicated in numbers 1 through 4 of article 4 of the Law of Amendment to the TLFT.
2. A minimum limit of 2% and a maximum of 8% for the transactions made by the taxpayers indicated in number 5 of article 4 of the Law of Amendment to the TLFT.
3. A minimum limit of 2% and a maximum of 20% for the transactions made by the taxpayers indicated in number 6 of article 4 of the Law of Amendment to the TLFT.

Tax obligation, declaration and payment

It is established that the amount to be paid will be that resulting from applying the relevant tax rate to each taxable base, as per the taxpayer or the transaction made.

Regarding the declaration and payment, it is established that the taxpayers and responsible parties must declare and pay in accordance with the following rules:

1. Each day, the tax on the debits made from accounts with banks or other financial institutions.
2. According to the Schedule of Payments of Value Added Tax Withholdings for Special Taxpayers,the tax on the discharge of debts through payment or other extinguishment mechanisms, without the intervention of banks or other financial institutions.

The declaration and payment must be made in the place, form, and conditions established by the National Tax Administration.

Penalties

Failure to perform the obligations established in the Law of Amendment to the TLFT will be penalized in accordance with the provisions of the Organic Tax Code (“OTC”).

Temporary Provisions

Chapter VII is added to the TLFT Law. Said Chapter establishes the temporary provisions, including articles 23, 24, 25, and 26, which provide as follows:

1. Exemptions: The National Executive may fully or partially exempt the transactions made by specific individuals/entities, economic segments or sectors of the country from payment of the TLFT. The exemption decrees to be issued must indicate the conditions, periods of time, requirements, and controls required.
2. Temporary Tax Rate: The following temporary tax rate is established until the National Executive establishes a different one:

a. 2% for the transactions made by the taxpayers indicated in numbers 1 through 4 of article 4 of the Law of Amendment to the TLFT.
b. 3% for the transactions made by the taxpayers indicated in numbers 5 and 6 of article 4 of the Law of Amendment to the TLFT.

3. Assessments upon SENIAT’s initiative: The SENIAT may, upon its own initiative, make assessments of the tax established in the amendment, on a certain or a presumptive basis, according to the provisions of the OTC.

The Amendment to the TLFT Law will enter into force upon the elapsing of 30 calendar days following its publication in the Official Gazette, that is, on March 27, 2022.

In order to access the Law, please click here.

Should you have any question or comment or require further information, please contact the partner in charge of your account via email.