Banking and Finance

The Venezuelan Central Bank (VCB) established the interest rates applicable to obligations derived from employment relationships (59.26% and 47.63% - August 2024; 59.23% and 47.62% - September 2024) and to transactions with credit cards (60.00% annual maximum lending rate and 17.00% annual minimum lending rate - September and October 2024). (Official Gazette of 10/29/2024. Official Notices. Entry into force: Upon publication in the Official Gazette). BANKING AND FINANCE TAX Bonded Warehouse Regime and not used, must be delivered to the Regional Management, Sector or Unit of Internal Taxes of the domicile of the taxpayer for destruction; 4) the liquor warranty seals identified with designation F-07-2015 or years preceding 2015 that are in SENIAT’s custody must be destroyed in accordance with the procedures established in the rules that govern the matter. (Official Gazette of 10/08/2024. Administrative Ruling SNAT/2024/000098. Entry into force: Upon publication in the Official Gazette).

Tax

The National Integrated Service of Customs and Tax Administration (Servicio Nacional Integrado de Administración Aduanera y Tributaria - SENIAT) issued an Administrative Ruling with the purpose of regulating the use and period of effectiveness of the Warranty Seals to be placed on the Taxed Species of National and Imported Production.
Said Ruling established:
1) the liquor warranty seals acquired by the producers or importers of taxed species may not be transferred, assigned or sold;
2) the liquor warranty seals the issue and circulation of which is authorized by SENIAT may be used for a period of two years as from the date of acquisition;
3) the liquor warranty seals identified with designation F-07-2015 or years preceding 2015, acquired under the Bonded Warehouse Regime and not used, must be delivered to the Regional Management, Sector or Unit of Internal Taxes of the domicile of the taxpayer for destruction;
4) the liquor warranty seals identified with designation F-07-2015 or years preceding 2015 that are in SENIAT’s custody must be destroyed in accordance with the procedures established in the rules that govern the matter. (Official Gazette of 10/08/2024. Administrative Ruling SNAT/2024/000098. Entry into force: Upon publication in the Official Gazette).

Civil Aeronautics

The Ministries of the Popular Power for Ecosocialism and for Transportation issued the rules to coordinate the environmental management in the civil aeronautics activity carried out at the national and international airfields and airports of the Bolivarian Republic of Venezuela. (Official Gazette of 10/11/2024. Joint Resolution. Entry into force: Upon publication in the Official Gazette).

Miscellaneous

The Autonomous Service of Registries and Notaries’ Offices (Servicio Autónomo de Registros y Notarías - SAREN) issued an Administrative Ruling with the purpose of regulating the implementation of electronic means in the processes carried out by the SAREN, in order to optimize the service of registries and notaries’ offices, in relation to the verification of the identity of the executing parties, through the biometric analysis of the user identification elements, in the framework of the electronic handling of the registry and notary processes carried out by said Service. The implementation of fingerprint biometry electronic means will be progressively applied, starting at the notaries’ offices located in the capital region. (Official Gazette of 10/17/2024. Administrative Ruling No. 525. Entry into force: Upon publication in the Official Gazette).

Banking and Finance

Paraguay reaches investment grade for the first time in its history

The risk rating agency Moody's announced that it raised Paraguay's credit rating from Ba1 to Baa3, granting it investment grade for the first time in its history, reported the Ministry of Economy and Finance (MEF) on past July 24, 2024. Paraguay joins a select group of countries in the region to have the sovereign degree, Chile, Colombia, Mexico and Peru.

In a statement, they indicated that this stable outlook is reached after 26 years when the rating agency assigned a rating to Paraguay for the first time and after 9 years since the last upward review. "This unprecedented achievement is based on the country's solid economic fundamentals and its long history of macroeconomic stability," the MEF said.

They claim that it is the result of more than 20 years of responsible, consistent and predictable public policies. Prudent management of macroeconomic policies was able to achieve and preserve the sustainability of public finances and maintain low inflation

Tax

Agreement between Paraguay and Spain to avoid double taxation finally in force

After ratification by Paraguayan Law Nr. 7.271/2024 and publication in the Official bulletin of the Spanish Kingdom on July 29, 2024, said important agreement for the economic relationships between both countries shall be in force starting October 14, 2024, having effect for all tax purposes since January 1, 2025.

The agreement comprehends the Personal Income Tax, Corporate Tax and Non Resident income taxes in both countries (the so called IRP, IRE and IDU, and INR in Paraguay and IRPF, IS and IRNR in Spain) document observes OECD standards and includes measures to prevent tax base erosion and profit shifting (BEPS), affecting to Personal and Company income taxes in both countries (including income taxes for non-residents), which must now be ratified by the respective Congresses for its entry into force. Model Tax Convention on Income and on Capital 2017 shall be applicable for the interpretation of articles 5 (permanent establishment) and 7 (entrepreneurial benefits) of said Agreement.

Energy

Amendment of Law "On the Independent Production and Transmission of Electric Energy (PTIEE)"

On August 20224 Law No. 7299/2024 that amend Law Nr. 3009/2006 was enacted to foster private investments for the generation of renewable electricity through small hydroelectric plants (SHPs), by introducing correction of concepts that blocked the previous legislation to be applicable and improving the legal framework, by extending the threshold to grant licenses up to 50 MW and generation greater than 50MW should be subject to international public tenders, without the requirement of a risk-sharing contract with the national utility company (ANDE) as stated in the previous Law, although it retains a first call right to acquire the energy generated in case it is not exported or it is needed in the internal market.

Among other changes, the Ministry of Public Works and Communications replaced a Council of several Ministries (MOPC, Environment, Industry and Trade, Foreign Affairs) that made the procedure very bureaucratic. It must be clarified that shall Law is only applicable for the generation of electricity from the use of natural gas and/or minor hydroelectric generation, which also includes cogenerators and self-generators. This Law does not apply to other renewable energies (solar, wind) governed by Law No. 6977/2023, on Non-Conventional Renewable Energies (NCRE).

Public Procurement

Enactment of Decree Nr. 2264/2024, which regulates Law No. 7021 of December 9, 2022, "On Public Supply and Procurement".

This decree imposes a significant advance in what has to do with administrative management in public procurement. It seeks to improve efficiency, transparency and all flexibility in everything that has to do with public procurement processes. There are updates in terms of terminology, structure, facilitating reading and limiting the search for information and providing greater clarity to the management of State procurement, reducing the deadlines that have to do with protests, reconsideration appeals and deadlines for responses from public institutions to the DNCP.

A special type of bidding that he highlighted is joint procurement, which he described as an innovation in public procurement. It consists of public institutions coming together to buy goods or services, in search of efficiency through the implementation of economies of scale and administrative standardization. The annual average of the awards is USD 3.246 million, with 9.513 procedures and 3.266 suppliers.

Banking and Finance

The Venezuelan Central Bank (VCB) established the interest rates applicable to obligations derived from employment
relationships (59.26% and 47.63% - August 2024) and to transactions with credit cards (60.00% annual maximum lending rate and 17.00% annual minimum lending rate - September 2024). (Official Gazette of 09/16/2024. Official Notice. Entry into force: Upon publication in the Official Gazette).

Tax

The National Integrated Service of Customs and Tax Administration (Servicio Nacional Integrado de Administración Aduanera y Tributaria - SENIAT) established the rate applicable to the calculation of late payment interest accrued during July 2024. It was established that the weighted average interest rates for loans of the six (6) principal commercial and universal banks of the country with the highest volume of deposits, excluding portfolios with prime rates, set by the Venezuelan Central Bank (VCB) for July 2024 is of 59.20%, which rate is to be increased 1.2 times for the calculation of late payment interest accrued during said month. (Official Gazette of 09/17/2024. Administrative Ruling SNAT/2024/000090).

Insurance and Reinsurance

The Superintendence of the Insurance Activity (Superintendencia de la Actividad Aseguradora - SUDEASEG) issued the Prudential Rules of the Insurance Activity. (Official Gazette No. 6.835 Extraordinary of 09/03/2024. Administrative Rulings from No. SAA-01-0478-2024 to No. SAA-01-0512-2024 and from No. SAA-01-0516-2024 to No. SAA-01-0537-2024. Entry into force: Upon publication in the Official Gazette). The SUDEASEG, through Administrative Rulings, annulled: (i) the regulation of the group life insurance approved by Ruling No. F55-2-0041 del 01/24/2000, published in
Official Gazette No. 5.441 Extraordinary of 02/21/2000; (ii) the general conditions, particular conditions, riders, request for insurance and loss report of the land transport insurance policy approved by Ruling No. 003947 of 11/25/2009, published in Official Gazette of 12/21/2009; and (iii) the general conditions and particular conditions of the land vehicle hull insurance policy approved by Ruling No. FSAA-9-00094 of 01/12/2017, published in Official Gazette of 04/24/2017. (Official Gazette No. 6.835 Extraordinary of 09/03/2024. Administrative Rulings Nos. SAA-01-0513-2024, SAA-01-0514-2024, and SAA-01/0515/2024. Entry into force: Upon publication in the Official Gazette).

Miscellaneous

The Presidency of the Republic issued the Decree of Removal and Liquidation of the National Center of Foreign Trade (Centro Nacional de Comercio Exterior - CENCOEX). (Official Gazette No. 6.843 Extraordinary of 09/19/2024. Decree No. 5.006. Entry into force: Upon publication in the Official Gazette). A Presidential Decree authorized the creation of a State-owned company under the form of a sociedad anónima, called “Agencia de Promoción de Exportaciones, S.A.”, assigned to the Ministry of the Popular Power for Economy, Finance, and Foreign Trade. The
purpose of said company will be to promote exports and to further positioning of non-oil goods and services for international markets. (Official Gazette No. 6.843 Extraordinary of 09/19/2024. Decree No. 5.007. Entry into force: Upon publication in the Official Gazette). A Presidential Decree established the General Staff of Non-oil Exports, subordinate to the President of the Republic, which will help in the making of strategic decisions in relation to non-oil export matters. (Official Gazette No. 6.843 Extraordinary of 09/19/2024. Decree No. 5.008. Entry into force: Upon publication in the Official Gazette).

Banking & Finance

The Venezuelan Central Bank (VCB) established the interest rates applicable to the obligations derived from employment relationships (59.20% and 47.60% - May and July 2024) and to transactions with credit cards (60.00% annual maximum lending rate and 17.00% annual minimum lending rate - June and August 2024). (Official Gazette of 08/16/2024. Official Notice. Entry into force: Upon publication in the Official Gazette).

Tax

A Presidential Decree exempted the net taxable income of territorial source obtained by Cooperative Associations organized under the Decree with the Force of Special Law of Cooperative Associations from payment of income tax. The benefit of exemption will have a duration of one (1) year as from the date of publication of said Decree in Official Gazette and it may be extended for one (1) year. The exemption will be applied to the fiscal years in progress when the Decree becomes effective. (Official Gazette of 08/12/2024. Decree No. 4.976. Entry into force: Upon publication in the Official Gazette).

The National Integrated Service of Customs and Tax Administration (Servicio Nacional Integrado de Administración Aduanera y Tributaria - SENIAT) established the rate applicable to the calculation of late payment interest accrued during March, April, May, and June 2024. It was established that the weighted average interest rate for loans of the six (6) principal commercial and universal banks of the country with the highest volume of deposits, excluding portfolios with prime rates, set by the Venezuelan Central Bank (VCB) for March, April, May, and June are: 58.98%, 58.98%, 59.20%, and 59.25% respectively, which rates are to be increased 1.2 times for the calculation of late payment interest accrued during said months (Official Gazette of 08/21/2024. Administrative Rulings Nos. SNAT/2024/000068, SNAT/2021/000076, SNAT/2021/000077, SNAT/2022/000081).

The SENIAT legalized the issue and circulation of liquor warranty seals. (Official Gazette of 08/21/2024. Administrative Ruling No. SNAT/2024/000082. Entry into force: Upon publication in the Official Gazette).

A Presidential Decree extended until 12/31/2024 the effectiveness of Decree No. 4.907, published in Official Gazette No. 6.784 Extraordinary of 12/29/2023 and extended by Decree No. 4.967, published in Official Gazette No. 6.818 Extraordinary of 06/28/2024, which Decree No. 4.907 establishes the exemptions from import duties and value added tax for the importation of goods indicated in Chapter II of said Decree.

Therefore, the exemptions or benefits indicated in Decree No. 4.907 continue to be in effect, in the terms and conditions that said Decree establishes. (Official Gazette of 08/30/2024. Decree No. 4.985. Entry into force. As from 09/01/2024).

Miscellaneous

The Ministries of the Popular Power for Economy, Finance, and Foreign Trade and for Transportation established, through a Joint Resolution, the regulation of the “Exporta Fácil Postal” service, which consists in an exportation service via mail, by means of the operating platform of the Instituto Postal Telegráfico de Venezuela (IPOSTEL) (Postal Telegraph Institute) or another authorized postal operator. The purpose of said Resolution is to establish the procedures for exportation of the products of startup entrepreneurs, micro, small and mediumsized entrepreneurs and artisans of the country, in order to achieve a fast process for the exit of the goods via mail. (Official Gazette of 08/15/2024. Resolution No. 005- 2024 and Resolution No. 034. Entry into force: Upon publication in the Official
Gazette).

A Presidential Decree: 1. Ordered the elimination of the Ministry of the Popular Power for Youth and Sports and created the Ministry of the Popular Power for Youth and the Ministry of the Popular Power for Sports; 2. Ordered the elimination of the Ministry of the Popular Power for Urban Agriculture, the competence of which will be transferred to the Ministry of the Popular Power for Communes and Social Movements, which will now be called Ministry of the Popular Power for Communes, Social Movements, and Urban Agriculture (Official Gazette No. 6.830 Extraordinary of 08/27/2024. Decree No. 4.980. Entry into force: Upon publication in the Official Gazette).

A Presidential Decree assigned the National Institute for Socialist Training and Education (Instituto Nacional de Capacitación y Educación Socialista - INCES) to the Ministry of the Popular Power for the Social Process of Work. (Official Gazette of 08/28/2024. Decree No. 4.983. Entry into force: As from the date of its publication in the Official Gazette).

Strategies for reducing taxes: adapting to the new rules of the Tax Reform in Brazil

In this article, we explore effective strategies for reducing taxes and ensuring compliance with the new rules of the Tax Reform in Brazil. Tax planning is a recurring topic on business and family agendas, especially with the imminent tax reform in Brazil. The new regulations will significantly impact the incidence of taxes on inheritances, donations and private pension plans.

What will change in inheritances with the new rules of the Tax Reform?

The main topic is the changes to the Causa Mortis and Donation Transfer Tax (ITCMD). Currently, each Brazilian state sets its own rate, which can be fixed or progressive, with a ceiling of 8%. With the reform, the ITCMD will become progressive, increasing according to the value of the estate.

In addition, the ITCMD will also be applied to open-ended private pension plans, including Free Benefit Generator Plans (PGBL) and Free Benefit Generator Life (VGBL). Amounts invested more than five years ago in the VGBL will not be taxed in the event of death.

Another significant change is the inclusion of ITCMD on inheritances and donations of assets abroad, a tax that until now did not exist for beneficiaries domiciled in Brazil. The Treasury estimates that the ITCMD represents 0.4% of the national tax burden, in line with the average for OECD countries.

Strategies to Minimize the Impacts of Tax Reform

• Creating Family Holdings: One of the main strategies is to structure family holdings. For those who own a lot of real estate, for example, it is possible to set up a real estate holding company, transferring the real estate to the company and leaving the holding shares to the heirs.
• Allocating resources abroad: For larger assets, allocating part of the resources abroad can be an alternative. This practice, if done legally and with income tax declared, helps to mitigate the “Brazil risk”.
• Lifetime Gifting: Anticipating the transfer of assets while you are still alive is another strategy. With the tax reform, donating real estate and other assets before the new rules come into force can minimize future tax impacts.
• Specialist advice: It is essential to rely on the advice of professionals who specialize in tax and succession planning.

The changes brought about by the tax reform require a careful review of estate planning. Anticipating and properly structuring the succession of assets can lead to significant tax savings and guarantee financial security for generations to come.

TAX
A Presidential Decree extended until 12/09/2024 the effectiveness of Decree No. 4.525, published in Official Gazette of 06/09/2021 (Decree of Optimization and Revitalization of Exportation Processes). Therefore, the exemptions from the legal regimes for exportation indicated in said Decree No. 4.525 continue to be in effect, in the terms and conditions established in the same. (Official Gazette No. 6.820 Extraordinary of 07/01/2024. Decree No. 4.970. Entry into force: As from 06/09/2024). The National Integrated Service of Customs and Tax Administration (Servicio Nacional Integrado de Administración Aduanera y Tributaria - SENIAT) authorized the issue and circulation of liquor warranty seals. (Official Gazette Administrative of Ruling 07/12/2024. No. SNAT/2024/000046. Entry into force: Upon publication in the Official Gazette). A Presidential Decree set at zero percent (0%) the rate of the Tax on Large Financial Transactions for transactions made by the following taxpayers: (i) Legal persons and unincorporated economic entities, categorized as special taxpayers, for the payments made by them to the debit of their accounts with banks or financial institutions; (ii) Legal persons and unincorporated economic entities, categorized as special taxpayers, for the payments made by them without the intervention of financial institutions. Cancellation is understood as the offset, novation and extinction of debts; (iii) Legal persons and unincorporated economic entities, legally related to a legal person or unincorporated economic entity, categorized as special taxpayer, for the payments made by them to the debit of their accounts with banks or financial institutions or without the intervention of financial institutions; (iv) Natural and legal persons and unincorporated legal entities that without being legally related to a legal person or unincorporated economic entity, categorized as special taxpayer, make payments for their account, to the debit of their accounts with banks or financial institutions or without the intervention of financial institutions. (Official Gazette No. 6.821 Extraordinary of 07/12/2024. Decree No. 4.972. Entry into force: As from 07/15/2024).

MISCELLANEOUS
The National Assembly enacted the Law on Promotion of Non-Oil Exports. The purpose of the Law is to establish and develop mechanisms intended to facilitate the exportation of non-oil goods and services, generated in the Bolivarian Republic of Venezuela, in order to increase Venezuelan products’ participation and competitiveness in international markets, according to the commitments and obligations undertaken in the frame of the multilateral, regional, and bilateral trade mechanisms and for the country’s integral and sustainable development. Title IV of the Decree with the Status, Value and Force of Law of Banco de Comercio Exterior is repealed, as well as the other provisions of said Decree related to the promotion of exports and all provisions contrary to the Law on Promotion of Non-oil Exports. (Official Gazette No. 6.824 Extraordinary of 07/18/2024. Entry into force: Upon publication in the Official Gazette).

The Ministry of the Popular Power for National Trade declared the following standards as Venezuelan COVENIN Standards of national character; the content of said standards will be published in the institutional web site of the Deconcentrated Service of Standardization, Quality, Metrology, and Technical Regulations (Servicio Desconcentrado de Normalización, Calidad, Metrología y Reglamentos Técnicos - SENCAMER) (www.sencamer.gob.ve). (Official Gazette of 07/10/2024. Entry into force: Upon publication in the Official Gazette).