- Private investment in Venezuela
- What is considered foreign investment?
- Investment procedure
- Investor restrictions and limits
- Investment legal framework
- Tax regulations
- Intellectual property legislation
- Investor protections
Venezuela’s national policies regarding private investment are based on equality and guarantees of legal safety. Article 301 of the 1999 Constitution indicates that foreign investment is subject to the same conditions as domestic investment. In addition to the constitution, other current laws classify private investment as a tool for social development, expressly defending the principles of free competition, property rights, alternative dispute resolution mechanisms (arbitration, settlement and mediation), and equal treatment for domestic and foreign investors. Venezuela employs international standards in regulations for agreements with private capital. Nevertheless, it reserves exceptions for certain strategic sectors, such as oil activities and other industries of public and strategic interest.
- According to Law-Decree 2095, the following are considered foreign investment:
- Contributions originating from outside the country, belonging to foreign nationals, that will become part of a firm’s capital, in freely exchangeable currency or tangible goods, such as industrial plants, new or refurbished machines, new or refurbished equipment, replacements, parts, primary materials or intermediate products.
- Investments or re-investments that follow this law, made in national currency, that are the property of foreign nationals or firms, originating from utilities, capital gains, interest, or loan payments. Participation in firms and other rights or resources over which foreign investors have the right to transfer abroad.
- The conversion of foreign debt into investment that is the property of foreign nationals.
- Tangible technological contributions such as brands, industrial models, technical assistance and patented non-presented methods that may be present in physical goods, technical documents or instructions.
Decree 2095 establishes that the value of foreign direct investment, re-investment and capital increases will be presented through the Foreign Direct Investment Registry of the Superintendence of Foreign Investments (SIEX, Registro de Inversión Extranjera Directa en la Superintendencia de Inversiónes Extranjeras).
3.1 Constitution and registration of firms
Foreign investors who wish to establish their firm in Venezuela will first have to constitute their company according to the legal status they want (for example, a public corporation), and register it in the Commercial Registry, along with their constitutive statutes and commercial name. Additionally, they must obtain a Tax Information Registration from the Tax and Customs Administration Office (SENIAT) for payment of their respective taxes.
3.2 Registration of Investments in the SIEX
In Venezuela, no special prior authorization is necessary to invest as long as the investment does not fall afoul of the relevant sector’s laws. Conforming to what is established in Article 13 of Decree Number 2,095, foreign investments do not require prior authorization, but do require subsequent registration requested to the SIEX or the corresponding agency in the sector, within sixty (60) continues days of the date of the firm’s entry in to the Commercial Registry corresponding to the constitutive act that gave rise to the foreign investment in question.
Restrictions for investments only exist in hydrocarbon sectors, professional sectors regulated by law, open television, radio and press written in Spanish. An investor that wishes to establish a company in Venezuela must register the constitutive act of the firm residing in Venezuela and its statutes in the Commercial Registry. Each company will adopt the legal status it desires according to the law and its own statutes.
Foreign investors and technology transfer agreements registered and updated in the SIEX have the full support of the Venezuelan State, giving them a guarantee of repatriation of profits, remittance of dividends, and fair and equal treatment to domestic capital. As such, these processes constitute an additional element for their protection and promotion.
3.3 Functions of the Superintendence of Foreign Investments (SIEX):
3.3.1 Releasing the Registry of Foreign Investments and Technology Importation.
3.3.2 Registering contracts related to technology importation and the use of patents and brands, except in the hydrocarbon and mining sectors.
3.3.3 Awarding proof of qualifications to firms in the sectors for which it is responsible.
3.3.4 Periodically releasing statistics related to the flow of foreign investments in Venezuela in the sectors for which it is responsible.
3.3.5 Collaborating with other agencies in the promotion and protection of foreign investments.
3.3.6 Supporting and implementing policies related to the promotion, attraction and protection of domestic and foreign investment.
3.3.7 Supporting representatives of the Ministry of People’s Power for Commerce in international negotiations in the areas for which it is responsible.
3.3.8 Monitoring foreign investment and technology importation for taxation purposes.
3.3.9 Coordinating the activities of advisory committees in matters for which it is responsible.
3.4 Agencies related to investment, commerce and the registration of firms
Registration of investments: National Superintendence of Foreign Investment
Registration and supervision of financial sector: Superintendence of Banks and Other Financial Institutions
Registration and supervision of insurance: Superintendence of Insurance
Promotion of industry and commerce: Ministry of People’s Power for Commerce
Restrictions only exist for investors in non-natural gas hydrocarbons, professional services regulated by special laws, open television, radio and press written in Spanish.
- Decision 291 – Cartagena Commission Agreement: Common Provision of the Andean Pact that regulates, at a sub-regional level, the treatment of foreign capital and technology importation and the use of brands and patents. (Federal Gazette of the Republic of Venezuela Number 4,284 of June 28, 1991.)
- Decision 292 – Cartagena Commission Agreement: Common Provision of the Andean Pact that regulates, at a sub-regional level, the treatment of multinational Andean firms. (Federal Gazette of the Republic of Venezuela Number 4,284 of June 28, 1991).
- Decree Number 2,095 of February 13, 1992: National regulation of the Common Provision that regulates the treatment of foreign investment and technology importation and the use of brands and patents. (Federal Gazette of the Republic of Venezuela Number 34,930 of March 25, 1992.)
- Resolution Number 2,912 of September 26, 1995: Provision for the registration of investments made with the products of sales of titles denominated in currency emitted by the Republic. (Federal Gazette of the Republic of Venezuela Number 34,807 of September 29, 1995.)
- Decree Number 356 of October 3, 1999: Decree, with the rank and strength of law, of the promotion and protection of investments. (Federal Gazette of the Republic of Venezuela Number 5,390 of November 18, 1999.)
- Decree Number 1,867 of July 11, 2002: Regulation of the decree, with rank and strength of law, of the promotion and protection of investments. (Federal Gazette of the Bolivarian Republic of Venezuela Number 37,489 of July 22, 2002.)
The tax regime in Venezuela complies with the principle of legality, attributed to the government in its various jurisdiction: national, state and municipal. The authority for tax collection is the Tax and Customs Administration Office (SENIAT), directed by the Finance Ministry. The Constitution stipulates that “no tax, tariff, or contribution that has not been previously established by law can be collected.” Additionally, the country has signed agreements with various nations to avoid double taxation. These agreements limit the taxes that the country of the investment’s origin can apply to the dividends, interests and royalties the investor may receive. It is worth highlighting that tax incentives exist for private investors in some sectors of the economy.
6.1 Double taxation treaties
According to these treaties, if a firm is active in several countries, it will be subject to tax payments in each country for only those activities that take place in the country. To date, Venezuela has signed these agreements with the following countries:
- Germany – China – United States – Norway – Czech Republic
- Barbados – Colombia – France – Peru – Switzerland
- Belgium – Denmark – Indonesia – Portugal – Sweden
- Bolivia – Ecuador – Italy – United Kingdom
- Canada – Spain – Mexico – Netherlands
- Trinidad and Tobago
Net annual income for individuals and companies are subject to taxation. Taxes vary progressively, between 15%, 22% and a maximum of 34% of net income. For more information, please visit: contribuyente.seniat.gob.ve/index.htm
Venezuela has ample legislation for the protection of intellectual and industrial property, which are essential for the development of investments. Both matters are regulated by different laws, including national regulations as well as international agreements. In the case of industrial property, Venezuela adheres to the Paris Convention, the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), and the Cartagena Commission Agreement’s Decision Number 486 on Industrial Property. It is important to note that decisions by the Andean Community relating to the matter of intellectual property remain in force and are a part of the internal legal order until such time as they are supplanted by new laws.
The agency in charge of the supervision and protection of intellectual property is: the Autonomous Service of Intellectual Property (www.sapi.gov).
National laws on intellectual property:
7.1 Industrial Property Law: Federal Gazette Number 25,227 of December 10, 1956.
This law deals with the rights of inventors, discoverers and introducers of creations, inventions or discoveries related to industry, and those of producers, manufacturers or businesspersons over the phrases or logos they adopt to distinguish their work or activities from similar ones.
7.2 Authors’ Rights Law
This law protects the rights of authors over creative works whether in literature, science or art, regardless of genre, form of expression, merit or use.
- Decision 351 of the Andean Community of Nations (CAN)
- Decision 345 of the CAN
- Decision 391 of the CAN
- Decision 486 of the CAN
Regarding authors’ rights, Venezuela has ratified the following international treaties:
- Paris Convention on the Protection of Industrial Property
- Bern Convention for the Protection of Literary and Artistic Works
- Universal Convention for the Rights of Authors; World Intellectual Property Organization Treaty on the Rights of Authors
- International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations
- Convention for the Protection of Phonogram Producers and Broadcast Organizations
- Convention for the Protection of Phonogram Producers against the Unauthorized Reproduction of their Phonograms
- World Intellectual Property Organization Treaty on Performances and Phonograms
- Establishing Convention of the World Intellectual Property Organization
- Agreement on Trade-Related Aspects of Intellectual Property Rights
To learn about some of the policies that protect private investment, see Decree-Law 356 for the Promotion and Protection of Investments of October 3, 1999, signed by President Hugo Chávez Frías.
The main purpose of this law is to provide investors, whether domestic or foreign, with known and safe regulations for operation. Some of the legal avenues of protection include: the right to fair compensation in case of a legally carried out expropriation; the ability to sign legally sound contracts; the ability to seek conflict resolution through national or international arbitration; and the guarantee to transfer profits and invested capital in an exchangeable currency at the current rate abroad.
The law states the following:
Article 6: International investors have the right to fair and equal treatment under the laws and criteria of international law and will not be subject to arbitrary or discriminatory measures.
Article 7: International investors have the same rights and obligations as domestic investors under similar circumstances, with the sole exception being what is stated in special laws and the limits contained in this law.
Finally, note that Venezuela has signed many bilateral accords for the promotion and protection of investments.
Accords have been signed with the following countries: