A new wealth tax in Venezuela has implications for companies and employees operating in Venezuela.

Venezuela has enacted a wealth tax, which took effect on July 3, 2019.  The tax applies to individuals with assets of approximately $252,000 in Venezuelan tax units (which fluctuate regularly), and companies with assets of around $700,000.  The tax rate is 0.25% but can be increased to as much as 1.5%.

Resident taxpayers are subject to the tax on their global assets, wherever located, and non-residents are taxed on assets located in Venezuela or any rights that can be exercised there. And if a non-resident has a permanent establishment in Venezuela, the tax applies to the global assets associated with that permanent establishment.  The definition of a PE includes any construction, installation, or assembly project with a time frame of more than 3 months in Venezuela. 

Some property is automatically considered located in Venezuela.  That includes real estate in the country, aircraft, ships, and motor vehicles registered in Venezuela or registered abroad if used in Venezuela for least 120 days during the tax year, securities and shares issued by Venezuelan companies, and items such as jewelry and art located in Venezuela.  However, an individual taxpayer’s regular home is not included as taxable. 

The tax is not a deductible expense for corporate income tax purposes.