Banking and Finance

The Venezuelan Central Bank (VCB) established the interest rates applicable to obligations derived from employmentrelationships (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 inOfficial 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. Thepurpose 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).

Rules for registration of foreign reinsurance companies in Venezuela

The Superintendence of the Insurance Activity (Superintendencia de la Actividad Aseguradora - SUDEASEG) established the guidelines for registration with the registry of foreign reinsurance companies seeking to operate in Venezuela. These rules, published in Official Gazette No. 6.835 Extraordinary of September 3, 2024 and effective as from the same date, describe the necessary steps and documentation required for their compliance. 

From now on, requests for registration with said registry must be made through the SUDEASEG’s online system Sistema Único de Trámites. Exceptions for physical submissions will only be allowed under justified circumstances.

The information that foreign companies must file for the aforesaid registration include:

Key information, such as their name, corporate domicile, address, contact details, and an authenticated power of attorney for their representative. A certificate of the competent authority of the country of their domicile evidencing that the reinsurance company is legally organized in said country  and that it has an authorization issued at least five years before to carry out reinsurance and/or refinancing operations abroad,  indicating the lines of business in which it may operate  and that it has no impediments to payment of reinsurance technical accounts in freely convertible currencies Report and financial statements of the last three years, together with audit reports from recognized firms. A minimum equity of USD 10 million is required. Documents evidencing that the company is organized and registered in countries, dominions, jurisdictions, territories, or associate, cooperative states in the frame of the global fight against the crimes of risk management of Money Laundering, Terrorism Financing, and Financing of Proliferation of Weapons of Mass Destruction and other unlawful acts, as per the guidelines issued by the Financial Action Task Force (FATF). International credit ratings prepared by the providers of credit ratings mentioned in the Rules.

For purposes of the registration with the registry of foreign reinsurance companies, the Lloyd’s of London insurance and reinsurance market will be considered as a single reinsurer. Lloyd’s of London must send SUDEASEG a list of the syndicates that are members of Lloyd’s.

The SUDEASEG will be allowed a period of twenty (20) business days in order to answer the request for registration. The right to correct information or documentation is provided.

The registration must be renewed every three (3) years and the information presented in the request for registration must be updated. Any change in the information provided for registration or renewal must be sent to the SUDEASEG in a period of thirty (30) business days as from the time when such change occurs.

All documents filed in a language other than the Spanish language must be translated by a public interpreter. The powers of attorney and the certifications must have been issued no longer than six (6) months before the date of the request and they must be legalized or apostilled, as appropriate.

Tax Compliance Costs for Businesses in the USA 

Tax compliance costs represent a significant challenge for businesses in the USA. This reality impacts both profitability and growth capacity. In this article, we will explore the main aspects of compliance costs and their implications for the business sector. 

What are Tax Compliance Costs? 

Tax compliance costs include all expenses related to fulfilling tax obligations. This covers expenses for accounting, consulting, and software. Additionally, the time invested by employees to handle tax matters is an aspect to be analyzed. 

Financial Impact on Businesses 

According to the Tax Foundation, small and medium-sized businesses face the greatest challenges. Compliance costs can consume up to 60% of the time dedicated to financial management. This reduces the resources available for investments and innovations. For many businesses, this results in less growth and competitiveness in the market. 

The Need for Reform 

The complexity of the tax system is one of the main reasons for the high costs. A reform can simplify tax obligations by modernizing the current system. Automating tax tasks can reduce costs and increase efficiency. 

How to Manage Compliance Costs? 

Automation: Use tax management software. They help reduce errors and save time.  Training: Invest in training for your team. Well-trained employees manage tax obligations more effectively.  Consulting: Consider hiring specialists. Tax consultants can provide valuable insights. 

Tax compliance costs for businesses in the USA are high and increasing. However, tax system reform and the adoption of technology can provide some relief in costs. Efficient tax compliance management can lead to a healthier and more competitive business environment. 

On 17 August 2024, Assembly of the Republic of Montenegro adopted the Law on the Use of Energy from Renewable Sources, which was published in the Official Gazette of Montenegro, issue no. 082/24 (hereinafter: the “Law”).The first law of its kind enacted in Montenegro establishes a solid foundation for encouraging investment in renewable energy sources, with an emphasis on reducing carbon dioxide emissions and increasing the production of energy from clean and sustainable sources.What should be emphasized from the outset is that this Law fully implements EU Directive 2018/2001 on the promotion of the use of energy from renewable sources, thereby achieving complete alignment with these regulations.The Law establishes a comprehensive framework for promoting and regulating renewable energy. It defines the share of renewable energy, offers incentives for production, and outlines the process for obtaining preferential status as a producer. It also mandates issuing guarantees of origin for renewable energy, specifies the roles of buyers, producers, and renewable energy communities, and sets conditions for integrating renewable energy into heating, cooling, and transportation sectors. Additionally, it includes criteria for sustainability and emissions reduction, fosters regional cooperation, and addresses other important aspects of renewable energy utilization.Under the Law, renewable energy sources include non-fossil sources such as wind energy, solar energy (both solar thermal and photovoltaic), geothermal energy, ambient energy, tidal energy, wave energy and other marine energy, hydropower, biomass, landfill gas, gas from wastewater treatment plants, and biogas.

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 OfficialGazette).

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).

Uruguay: Pioneering a Green Energy Future

Uruguay has solidified its position as a global leader in renewable energy, with more than 90% of its electricity matrix powered by renewables between 2016 and 2022. Now, the country faces a new challenge: decarbonizing its transportation and industrial sectors, which still rely on fossil fuels. In this context, green hydrogen emerges as a key solution in the transition towards a fully sustainable energy matrix.

a) Why Invest in Green Hydrogen in Uruguay?

Proven Expertise and Leadership: Uruguay successfully completed its first energy transition, with 98% of its electricity demand met by renewable sources. Now, with a focus on green hydrogen, the country is advancing towards full decarbonization.

Unmatched Natural Resources: Uruguay's abundant solar and wind resources enable the competitive production of green hydrogen, with projected costs of USD 1.2–1.4 per kg by 2030.

Robust Infrastructure and Stability: With strong regulatory frameworks and political stability, Uruguay offers an ideal environment for long-term investments in clean energy projects.

b) The HIF Project in Paysandú: A Milestone for Uruguay

The announcement of the construction of a green hydrogen and eFuels plant in Paysandú, led by HIF Global, marks a US$ 4 billion investment. This plant is set to produce 256 million liters of eGasoline annually, contributing to the decarbonization of more than 150,000 vehicles per year. The investment includes US$ 2 billion for the construction of the plant and an additional US$ 2 billion for the development of wind and solar parks that will supply the renewable energy required to generate green hydrogen.

This project is a landmark in Uruguay’s second energy transition, placing the country at the forefront of green energy production worldwide. Uruguay’s first energy transition, completed over the past decade, enabled 98% of its annual electricity demand to be met by renewable sources such as wind, biomass, solar, and hydropower.

With sustained economic growth, social and political stability, forward-looking legislation, and privileged natural resources, Uruguay has become a global leader in renewable energy. Now, with green hydrogen and the promotion of electric mobility, the country aims to complete its transformation into a fully sustainable energy economy.

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.

EXEMPTION FROM PAYMENT OF INCOME TAX FOR INCOME OBTAINED BY COOPERATIVE ASSOCIATIONS

Decree No. 4.976, dated August 12, 2024, was published in Official Gazette No. 42.939 of the same date. Said Decree exempts the net taxable income of territorial source obtained by Cooperative Associations from payment of income tax (the “Decree”). Below are some of the most important aspects of the Decree:  

Beneficiaries:

The beneficiaries will be the Cooperative Associations organized in accordance with the provisions established in the Decree with the Force of Special Law of Cooperative Associations, which:

Must update their Sole Fiscal Information Registry, in order to which they must file the valid Certificate of Compliance issued by the National Superintendence of Cooperatives. Must file the annual declaration of taxed and exempt overall net income, as appropriate, in the terms and conditions established in the Regulations to the Income Tax Law. Loss of the exemption benefit:

The beneficiaries that fail to meet the requirements and perform the obligations established in Decree, as well as in the Decree with the Status, Value, and Force of Income Tax Law, its Regulations, and other applicable rules will lose the exemption benefit.

Losses resulting from exempted activity:

The losses resulting from the exempted activity may not be imputed in any fiscal year to the income resulting from the activity taxed with income tax.

In the cases in which the Cooperative Associations perform activities taxed with income tax and exempted in the terms of the Decree, the common costs and deductions applicable to the revenues resulting from said income will be proportionally distributed.

Duration:

The period of duration of the exemption benefit will be one (01) year as from the date of publication in the Official Gazette of the Bolivarian Republic of Venezuela, which period may be extended for one year. The exemption will be applied to the fiscal years in progress when the Decree becomes effective. 

In order to access the Decree, please click here.

TAXA 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).

MISCELLANEOUSThe 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).

Resolution No.Venezuelan COVENIN Standard No.It substitutes for Venezuelan COVENIN Standard No.080/20245035:2024 “Food for celiac persons, non-celiac gluten-sensitive persons, and wheat allergic persons.”081/ 20241431:2024 “Bottled drinking water. Requirements. (1st. Review).”1431:1982