Decree N° 285 (7 August 2013) was published in the official gazette N° 40.223 [PDF 8.7 MB], and provides that Venezuelan-source net income of individuals from primary exploitation of agricultural, forestry, cattle, poultry and fishery-related activities is exempted from the payment of income tax for those individuals who are “duly registered” as “beneficiaries” for this exemption.
The decree is effective (retroactively) from 1 January 2013 through 31 December 2015.
The decree defines “primary exploitation” as the simple attainment of fruits, products or goods found in nature, provided that they are not subject to any transformation or industrialization process.
For the purposes of determining whether the exploitation process qualifies under the “primary” criterion for agricultural, forestry, cattle, poultry and fishery-related activities, the activities must be carried out by landowners, farm owners or by any other individual relying on authorization for exploitation through a notarized document.
Concerning fishery-related activities, they must be carried out in boats, vessels or ships duly registered in Venezuela.
Conditions for exemption
To qualify for the income tax exemption, there are two essential conditions that must be satisfied:
- The individual’s “tax information registry” (RIF) data must be adequately updated by each person.
- All (100%) of the amount of income tax that would have been payable if the exemption had not been granted must be directly invested in scientific and technological research and development in the respective production field of each beneficiary of the tax exemption, for the improvement of productivity indexes or in capital assets. These direct investments must effectively be made during the tax year following the year when the exempt net income is realized.
Individual taxpayers eligible for the tax exemption must file an annual sworn statement listing all the required investments that they made as well as the amount of the income tax exemption invested during the subsequent tax year and must comply with all tax return filing obligations, formalities, and requirements.
Any losses resulting from the tax-exempt activity cannot be carried over to a tax year in which income from the exempt activity would be subject to income tax.
Noncompliance with any income tax rules and return filing requirements by the individual taxpayer will result in the loss of this tax-exemption benefit. Accordingly, in such instances, net income from the otherwise exempt activity would be deemed to be taxable.
Within the 30 days following the date of publication of the decree in the official gazette, eligible individual taxpayers must file a detailed sworn statement with several government offices (including the agricultural ministry and the tax authority (SENIAT)) and attach to that statement a list of all investments duly made and amounts invested during the 2012 tax year, as well as the respective investment plan for the amount of exempted tax for the 2013 tax year.
For more information, contact a tax professional with KPMG in Venezuela:
Zulay Pérez Sánchez
+58 212 277 78 11