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Venezuela, formally the Bolivarian Republic of Venezuela (Spanish: Repblica Bolivariana de Venezuela), is a South American nation with a continental mainland and several Caribbean islands and islets. It has a land area of 916,445 km2 (353,841 sq mi) and a population of 28 million people in 2019. Caracas is the capital and biggest urban agglomeration.
The Caribbean Sea and the Atlantic Ocean border the country on the north, Colombia on the west, Brazil on the south, Trinidad and Tobago on the north-east, and Guyana on the east. Venezuela has a claim against Guyana for Guayana Esequiba. Venezuela is a federal presidential republic made up of 23 states, the Capital District, and federal dependencies that include the country's outlying islands. Venezuela is one of the most urbanized nations in Latin America, with the great majority of Venezuelans residing in northern and capital cities.
The land of Venezuela was conquered by Spain in 1522, despite indigenous peoples' resistance. It was one among the first Spanish-American areas to proclaim independence from the Spanish and became a department of Colombia's first federal republic in 1811. (historiographically known as Gran Colombia). It became a fully independent nation in 1830. Venezuela experienced political turbulence and despotism throughout the nineteenth century, and was governed by regional military dictators until the mid-twentieth century. Since 1958, the nation has enjoyed a succession of democratic administrations, with the exception of the majority of the area being controlled by military dictatorships, and the time has been marked by economic prosperity. Economic shocks in the 1980s and 1990s triggered significant political crises and widespread social unrest, including the fatal Caracazo riots in 1989, two failed coups in 1992, and the impeachment of a President on allegations of misuse of public money in 1993. The 1998 Venezuelan presidential election served as the trigger for the Bolivarian Revolution, which started with a 1999 Constituent Assembly in which a new Venezuelan Constitution was enforced. Soaring oil prices aided the government's populist social welfare measures, temporarily raising social expenditure and lowering economic inequality and poverty in the early years of the dictatorship. Poverty, on the other hand, started to rise in the 2010s. The 2013 Venezuelan presidential election was extensively contested, resulting in major protests and a new statewide crisis that continues to this day.
Venezuela is a developing nation with a Human Development Index ranking of 113th. It contains the world's biggest known oil reserves and has historically been one of the world's main oil exporters. Previously, the nation was a developing exporter of agricultural commodities such as coffee and cocoa, but oil swiftly overtook exports and government earnings. The incumbent government's excesses and bad policies led to the collapse of Venezuela's entire economy. The nation is dealing with record hyperinflation, food shortages, unemployment, poverty, sickness, high child mortality, malnutrition, terrible crime, and corruption. These reasons have contributed to the Venezuelan migration crisis, in which over three million people have left the nation. Credit rating firms declared Venezuela to be in default on debt payments by 2017. Venezuela's crisis has exacerbated a fast worsening human rights situation, including intensified violations such as torture, arbitrary detention, extrajudicial murders, and assaults on human rights activists. Venezuela is a founding member of the United Nations (UN), the Organization of American States (OAS), the Union of South American Nations (UNASUR), ALBA, Mercosur, the Latin American Integration Association (LAIA), and the Organization of Ibero-American States (OEI).
Employees in Venezuela are entitled to 15 working days of paid vacation after one year of continuous employment, plus one extra working day for each successive year of service, up to a maximum of 30 working days per year.
The Bolivarian Republic of Venezuela recognizes 14 national public holidays.
Employees are entitled to three days of paid sick leave, and from the fourth day onwards, they will get 66.7 percent of their wage from social security for up to 52 weeks.
For the birth of a child, female employees are entitled to 26 weeks of maternity leave. Maternity leave can be taken up to six weeks before the baby is born, with the remainder taken after the baby is delivered.
After the birth of a child, fathers can take up to 14 days off work. This leave can be extended if the mother becomes unwell or dies, if the kid becomes unwell, or if twins or multiples are born.
Apart from the already mentioned terms regarding maternity and paternity leave, there are no other provisions in the law of Venezuela regarding parental leave.
Employees in Venezuela have a right to employment security. Dismissals of employees must be referred to the proper labor court for determination of the termination's legality. Without cause dismissal needed between one week and one month's notice, depending on the employee's length of service. Additionally, special requirements apply to redundancy dismissals.
In Venezuela, there is no statutory notice period; this is typically agreed upon in the employment contract.
Probationary periods are not specified in Venezuelan labor laws. However, an employee may be terminated without cause during the first 30 days of employment.
Employees are entitled to a "seniority benefit" equal to 30 days' pay for each year worked.
A typical workweek is 40 hours, or eight hours per day. Workers are required to take two consecutive days off per week, and Sunday is a rest day for the majority of businesses. Night shifts should not exceed seven hours in duration, and workdays should not exceed eleven hours in duration, day or night.
With permission, overtime is permitted but cannot exceed two hours per day, ten hours per week, or one hundred hours per year. Employees are entitled to overtime pay if they work more than 40 hours per week.
The minimum wage in Venezuela is set at 10 million bolivars per month.
The government mandates health and safety regulations in the workplace to avoid sickness and harm. Employers are not required by law to offer health insurance in the case of public health care. Nonetheless, the Venezuelan public health care system needs resources, particularly equipment and personnel training. Employers may choose to include private insurance choices among their workers' perks.
Employees get vacation incentives in addition to regular pay for vacation days. The company gives employees 15 days of salary for the first year and an extra day for each year of service after that. Employees may get up to 30 days of pay as an annual bonus.
A necessary benefit is described in the Workers' Food Law. Employers must offer one balanced lunch to their workers every day under this jurisdiction. This practice may include an in-house chef or an amount of money for purchasing lunch.
Firms based in Venezuela pay corporate income tax (CIT) on both Venezuelan and foreign-source revenue, while corporations based elsewhere with a permanent presence (PE) in Venezuela pay CIT solely on the Venezuelan and foreign-source income due to the PE. Corporations may claim as a tax credit any comparable taxes paid overseas on foreign-source revenue. Non-resident companies that do not have a PE are solely liable to CIT on Venezuela-sourced revenue.
Corporate income is taxed at the progressive rates depending on tax units as follows:
For a tax unit count of up to 2,000 tax units, the tax rate is 15 percent.
For a tax unit count between 2,000 tax units and 3,000 tax units, the tax rate is 22 percent.
For a tax unit count over 3,000 tax units, the tax rate is 34 percent.
The idea of a taxable unit was introduced in the 1994 Income Tax Law revision as an element that minimizes the negative impacts of inflation on the calculation of tax rates. The tax law set the starting TU at VEF 1, with yearly increases based on changes in the Consumer Price Index (CPI) from the preceding year. This adjustment parameter has been repealed in the new Master Tax Code. The TU value for 2020 was VES 1,500. The TU stated figure for 2021 is VES 20,000.
Individuals who are residents are taxed on their global income. Foreign residents having a fixed basis in Venezuela must pay taxes on their income, whether from a domestic or foreign source, that is traceable to that base. Non-residents must pay taxes on their earnings when the source or origin of the earnings is in Venezuela.
Individuals who are residents are taxed at graded rates. The following tax rate table is used to compute the yearly income tax, before credits:
0 to 1,000 tax units: 6 percent.
1,000 to 1,500 tax units: 9 percent.
1,500 to 2,000 tax units: 12 percent.
2,000 to 2,500 tax units: 16 percent.
2,500 to 3,000 tax units: 20 percent.
3,000 to 4,000 tax units: 24 percent.
4,000 to 6,000 tax units: 29 percent.
Over 6,000 tax units: 34 percent.
Non-resident persons' income from non-business professional activity is taxed at a rate of 34% on 90% of gross payments. Non-residents' salaries and other income earned in Venezuela are subject to a flat 34 percent withholding tax, which is deducted at the source.
Federal VAT (Impuesto al Valor Agregado, or IVA) is a one-time tax paid by the final consumer of all goods and services. However, each business entity involved in the process, from the sale of raw materials to the production and distribution of finished products to the final consumer, is required to include the tax on its products to customers (output tax) and to pay the tax on its purchases or imports of goods and services (input tax), with the amounts paid credited against the amounts due on its own activities. The net amount payable by each business is regarded as a tax on value added.
In general, VAT does not represent an additional cost to business enterprises because even though all types of business enterprises, including government departments and agencies (with some exceptions), are required to accept charges of the tax by suppliers on their purchases of goods and services, such amounts are normally deductible from the liability of the business enterprises for the tax on their bills to customers.
There are certain exceptions, most notably where a business's sales are VAT free, in which case the enterprise is regarded as the ultimate consumer and must absorb all VAT costs on its purchases except when its operations are subject to the zero rate. Input tax paid on products or services used to create VAT-exempt items, on the other hand, may be deducted for CIT purposes.
Employers of foreign nationals in Venezuela have various alternatives under the country's immigration system. The requirements, processing dates, work eligibility, and perks for accompanying family members differ depending on the kind of permission.
Before entering Venezuela, all foreign citizens must get a business visa – TR-N Visa – which is normally valid for one year and enables stays of up to 180 days, continuous or cumulative, during the term of the visa.
Short-term employees on home payroll utilize the 90-Day TR-L Visa, which allows them to work for 90 days.
The TR-L Visa is the most common kind of work authorization, valid for one year with infinite renewals. While there is no necessity for labor market testing, there is a minimum pay requirement that varies yearly. A TR-L Visa application needs the Ministry of Labour to first approve a Work Permit. All foreign individuals, regardless of nationality, must get a TR-L visa from a Venezuelan consular office following SAIME (Servicio Administrativo de Identificación, Migración y Extranjera) clearance. After five years of continuous residence in Venezuela, holders with TR-L visas are eligible for permanent residency.
Employment contracts may be verbal or written, with a set or indeterminate period. It is best if all contracts are in writing. The following specifications will be included in a signed contract:
Identification of the participants
The start date of the employee's employment.
Position Description and Timeline (if for a fixed-term)
Working hours and specifics
The employee's base pay and any other allowances
Any other employment terms or conditions
In Venezuela, there is no formal probation term. However, an employer may fire an employee without cause within the first 30 days of employment, which is typically regarded as the appropriate probationary term.
There is no set length for assignments. This is usually indicated in the employment contract for fixed-term employments.
Venezuelan Bolivar Fuerte
Before you begin the subsidiary procedure, you should analyze the various business kinds and which one is appropriate for you. There are two sorts of businesses in Venezuela: limited liability and public limited.
In the region, a limited liability corporation is not as frequent. It requires a minimum share capital of between USD 4 and USD 400, as well as at least one director and shareholder. A director and a shareholder are still required for public limited businesses, but no share capital is required.
Once you've decided on the sort of business you want, you must go through the legal formation procedure. You are required to:
1. Approve the name of your firm with the Company Registrar.
2. Publicize your articles of incorporation in a local newspaper.
3. Keep track of company books.
4. Obtain a tax ID from the National Integrated Service for Customs, Duties, and Taxes.
Regardless of the kind of business, you must designate at least one director and shareholder when establishing your subsidiary. Because your director does not have to be a citizen of the nation, you might pick one of your parent company's present workers.
Your articles of association are also required for registration. This document describes how your company will be operated, such as how you will pick directors and how you will handle financial records.
The Code of Commerce in Venezuela mandates all enterprises to register their financial records and books with the Company Registrar. You must also provide any relevant audit and public accountant reports. Before submitting these papers, they should be in Spanish and approved by your shareholders.