Venezuela
The country profile includes data on the income taxes paid by workers, their social security contributions, the family benefits they receive in the form of cash transfers as well as the social security contributions and payroll taxes paid by the employers. Results reported include the average and marginal tax burdens for eight different family types.
It also describes the personal income tax systems, all compulsory social security contribution schemes and universal cash transfers as well as recent changes in the tax/benefit system.
The national currency is the Bolivar. In 2013, the average exchange rate was VEF 6.28 to USD 1. In that year, the average worker earned VEF 54 489.74 and the Tax Unit (Unidad Tributaria – UT) was VEF 107.
The Report includes estimates of the tax wedge over the whole of the income distribution ordered by deciles of total labour income of formal wage earners derived from the household surveys.
1. Personal income tax system
The fiscal year for the income tax is the calendar year.
1.1. Central government income tax
The personal income tax is levied on wages, salaries or compensation for work received from employment plus income and gains received from self-employment or from professional activities. It is also levied on any investment income or capital gains.
The main exemptions for the income tax are:
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Compensations and indemnities relating to work injuries that are paid to the worker or his/her beneficiaries.
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Pensions or retirement income.
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Interest received on fixed income deposits, bonds, savings certificates or any other savings instruments specified by the laws relating to banks and other financial institutions.
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Interest paid on national bonds and any other debt instruments issued by the national government.
1.1.1. Tax unit
Members of the family are taxed separately.
Individuals who are residents of Venezuela are liable for personal income tax on their worldwide income. Non-residents are taxed on their Venezuelan-sourced income.
1.1.2. Tax allowances and tax credits
1.1.2.1. Standard tax allowances and tax credits
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A standard allowance of 774 tax units.1
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An allowance for each child aged 25 or less of 10 tax units.
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A tax rebate of 10 tax units when couples file separately. Only one of the spouses can claim this credit.
1.1.2.2. Main non-standard tax allowances and tax credits
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The amounts paid to training institutes in the country in respect of the education of taxpayers and their dependents aged 25 or less.
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Insurance premiums paid to resident companies to cover hospitalisation, surgery and maternity.
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Medical, dental and hospital service expenses incurred by the taxpayer, spouse, and children.
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Interest paid on loans to purchase the main residence, up to 1 000 tax units per year.
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Payments of rent on the taxpayer’s main residence up to 800 tax units per year.
1.1.3. Tax schedule
The annual income tax liability was calculated on the taxable income according to the following schedule in 2013:
1.2. State and local taxes
No state or local taxes are levied on wages.
2. Compulsory social security contributions
2.1. Employee contributions
The employee contributions are levied on gross wages excluding the end-year bonus (equivalent to a month’s wage). There is an upper ceiling on the contributions of 5 times the annual minimum wage (VEF 162 665 in 2013).
The contributions to the national institute for educational co-operation are paid on profits distributed by companies. For this exercise the assumption is that the distributed profits amount to 30 days of the employee’s wage, which equals the minimum set by the Organic Law of the Workers (LOTTT due to its initials in Spanish) in Articles 131 and 132.
2.2. Employer contributions
Employers are required to contribute to the following public programs.
The employers’ contributions are levied on the payroll.
3. Universal cash transfer
3.1. Amount for spouse and for dependent children
None.
4. Main changes in tax/benefit since 2013
The value of the tax units is adjusted each year. In 2015, the tax unit was VEF 150.
5. Memorandum items
5.1. Identification of an AW
The data refer to the earnings of workers within the formal sector. The average worker’s wage was calculated using microdata from the national household surveys.
Note
← 1. Taxpayers are entitled either to itemise the main non-standard allowances described or opt for the 774 tax unit standard allowance. This Report uses the latter.