On 27 March 2017, the President of Venezuela created the Plan to Bolster the Automotive Industry "Venezuela in Movement" (Plan de Reimpulso de la Industria Automotriz Venezuela en Movimiento) (the Plan) [1] and established VAT and import taxes exonerations. The Plan became effective on 27 March 2017 and will have a maximum duration of three years.

The Plan strengthens the Venezuelan automotive industry through internal sales of vehicles and motorcycles and imports of the components defined for their production referred to the Regime of Imported Assembly Material for Vehicles, "IAMV" [Régimen de Material de Ensamblaje Importado para Vehículos (MEIV)] with the own resources of dealers or individuals, or another regime for imports of imported assembly material.

The Plan includes the programs (i) "Vehicle of Individual Use" (vehicles produced or assembled in Venezuela of 2,000 cc or less); (ii) "Vehicle for the load of freight" (pickup trucks, articulated trucks and light, medium and heavy trucks) and (iii) "Production Motorcycle" (motorcycles produced or assembled in Venezuela of 250 cc or less).

1. Participation in the Plan

Car and motorcycle manufacturing companies that participate in the Plan shall, within 60 continuous days as of 27 March 2017, sign affiliation agreements for each program with the Republic of Venezuela, through the Ministry of the People's Power for Economy and Finance, to assemble and sell the vehicles and motorcycles in Venezuela.

2. Tax Benefits

2.1 VAT and import taxes exoneration

Transactions carried out within the respective programs mentioned above, are exonerated from payment of VAT and customs duties, according to these terms:

(i) imports of parts, pieces, and components for the assembly of vehicles and motorcycles, referring to MEIV regime, carried out by the manufacturing company with its own resources;
(ii) domestic sales of vehicles, made by manufacturing companies, which have signed the affiliation agreement; and,
(iii) sales of vehicles and motorcycles made by concessionary companies authorized by the manufacturing company to individuals and entities that comply with the Decree.

Exonerated operations shall be carried out by manufacturing companies that have subscribed to the corresponding affiliation agreement and the concessionary companies that have been authorized by the manufacturing company for the sales of vehicles and motorcycles within the determined programs.

2.2 Exoneration of the 15% luxury consumption tax

The Plan also exonerated the sales of vehicles assembled in Venezuela from the payment of the additional 15% VAT rate [2]. It is not clear whether the exoneration also applies to the sales of motorcycles.

2.3 Additional regulations established by the Revenue Service

The National Integrated Service of Customs and Tax Administration (Revenue Service) shall establish through Administrative Guidelines, the formalities, documents, time periods and corresponding mechanisms for implementing the above exonerations.

1. Import license

The manufacturing companies ascribed to the Plan may exceptionally obtain import licenses, in these cases:

(i) vehicles or motorcycles of their own brand, or the brand of the companies with verifiable legal relationship established internationally, and,
(ii) models not assembled in the country, up to an amount that does not exceed 30% of the total number of vehicles and motorcycles. For distributing licenses during 2017, the production of 2015 will be reviewed, and, in the later years, the projection of production of the same year the license is requested will be reviewed.

The assembly companies that participate in the Programs and work under the own resources framework, of concessionaries or individuals, should assign 10% of total collected revenue of the portion paid in foreign currency for vehicles produced and imported under this framework for acquiring imported raw materials (MEIV and local parts production) needed for the production of units to be sold entirely in Bolivars.

2. Acquisition of vehicles and motorcycles

Individuals and entities may acquire vehicles and motorcycles produced within the framework of the Bolster Plan, although individuals and the company Venezuela Productiva C.A.[3] will have priority. Other entities may purchase vehicles and motorcycles in these cases:

(i) For private productive use;
(ii) For selling, when the entity is a concessionary company or a national public administration entity authorized by the national assembly company; and
(iii) To allow an insurance company to comply with the insurance beneficiary in a substitutive indemnity in kind in agreement within an insurance contract, in the cases of total vehicle loss for accident, unforeseeable circumstances, or events of force majeure.

 


[1] Presidential Decree No. 2.78, Official Gazette No. 41.122 of March 27, 2017.
[2] The 15% rate is in addition to the general VAT 12% rate and applies to (i) the import of vehicles with a value equal to or greater than USD 40,000 or sale of vehicles manufactured in Venezuela with more than 6,000 tax units (approximately USD 2.571) factory price; and (ii) the import of motorcycles with a value equal to or greater than US $ 20,000 or sale of motorcycles manufactured in Venezuela with a top price of 2,500 tax units (approximately USD 1.071), among other considered luxury goods.
[3] Venezuela Productiva, C.A. is a joint venture company between the Government of Venezuela and Chery (http://www.venezuelaproductivaautomotriz.com/).

 

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