The recent Presidential Decree No. 67 of 17 August 2018 increased the general VAT rate to 16% (previously it was 12%). The new tax rate will apply starting 1 September 2018 and will last for the remainder of fiscal year 2018 and fiscal year 2019 (see Increase in the Venezuelan VAT general rate from 12% to 16%)
As a complement to Decree 67, the National Constituent Assembly issued the Constituent Decree of reform of the VAT Law of 21 August 2018 ("Decree of Reform of the VAT Law"), which modified relevant aspects of the VAT, specifically certain exemptions, the application of the additional tax rate on sanctuary consumption goods and services, and the general hydrocarbons consumption tax. The Decree of Reform of the VAT Law established that it will enter in force on the "first day of the second calendar month following its publication in the Official Gazette". Literally interpreting the rule would lead to conclude that said Decree will enter in force on 1 October 2018. However, the Tax Administration might intend to apply the Decree of Reform of the VAT Law from September 1, 2018 jointly with the increase of the general tax rate.
The essential changes on the VAT were:
- The abrogation of article 18(4), related to the exemptions on the sale of fuels derived from hydrocarbons, and supplies and additives destined to improve the quality of gasoline, such as ethanol, methanol, methylether-butyl-ether (MTBE), ethyl-tert-butyl ether (ETBE) and derivations thereof for the same purpose.
- The adjustment of article 19(2) to establish a broad and general exemption for the transportation of goods, instead of a detailed exemption on terrestrial transportation services based on each specific good (i.e., rice, salt, maize used to prepare food for human consumption, vegetable oils, minerals or liquid foods, sorghum, soybeans, etc.)
- The adjustment of literals a, b, f, h, i and j of article 61(1), all related to the additional tax rate (15%) applicable on sales, imports and services of sumptuary consumption, in order to exclude any references to tax units and/or replace any tax units amounts contained therein with amounts expressed in United States Dollars, as follows:
"1. For the sale, deemed sales or importation of:
a. Automobile vehicles whose customs value or factory price in the country is greater than or equal to US $ 40,000.
b. Motorcycles whose customs value or factory price in the country is greater than or equal to US $ 20,000.
f. Jewelry and watches whose value is greater than or equal to US $ 300.
h. Accessories for vehicles which are not attached to them in the assembly process, whose price is greater than or equal to US $ 100.
i. Artworks and antiques whose price is greater than or equal to US $ 40,000.
j. Artworks and antiques whose price is greater than or equal to US $ 40,000.
- The abrogation of the hydrocarbon consumption tax established in the Hydrocarbons Organic Law, applicable on each litter of hydrocarbon derived product sold in the domestic market between 30% and 50% of the price paid by the final consumer, which rate between both limits were to be set in the Budget Law.
 Decree No. 67, Official Gazette No. 6,395 Extraordinary of August 17, 2018.
 Constituent Decree of reform of the Value Added Tax Law, Official Gazette No. 6.396 Extraordinary of August 21, 2018.
 We have assumed that the Decree of reform of the Value Added Tax Law is legal, despite it has been issued by the National Constituent Assembly (“NCA”), bearing in mind that all the decisions adopted by the NCA have been implemented. The Supreme Court has recognized the legal authority of the NCA for issuing Decrees and laws. Notwithstanding, there are reasonable legal grounds to sustain the illegality of all acts issued by the NCA.