Company Formation in Venezuela
Updated on Monday 04th September 2023
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Many foreign investors choose to open companies in Venezuela which is one of the most urbanized countries in Latin America, with an economy primarily based on manufacturing and petroleum exports. In order to incorporate a company in Venezuela, it is recommended to contact a team of company formation specialists. Local consultants are more familiarized with the legislation, procedures and other formalities, hence, legal assistance is always recommended.
Types of companies in Venezuela
As a foreign entrepreneur that wants to set up a company in Venezuela, you can choose from many possibilities to enter the Venezuelan market and here are some of them:
- the share capital corporation (Sociedad Anonima);
- the limited liability company (sociedad de responsabilidad limitada);
- the publicly limited company;
- you can also choose to create a dependent branch office (sucursal) or a representative one.
However, the most popular is the limited liability company and these are the requirements in order to establish this company type:
- minimum 1 shareholder (of any nationality);
- at least 1 director;
- a minimum share capital of $4;
- is allowed to be 100% foreign-owned.
The company registration process in Venezuela
The first step consists in choosing and then reserving a name for your company, one that has not been used before and also obtaining an approval of the name at the Commercial Registry.
The second step for company registration in Venezuela is opening a bank account where you should receive a receipt with the amount that you deposited. Then you have to register with the "Registro Mercantil", which is the local mercantile registry. This has to be done within a month from the name reservation approval date.
The third step is publishing a notice in a local mass-circulation newspaper to announce the incorporation of the new company. This is a procedure that our team of company registration agents can easily complete for you.
Then you need to acquire a fiscal number from the SENIAT (Service of Tax Administration and Customs), and after that, a certificate of tax clearance from the Electricidad de Caracas.
Last, but not least, you have to obtain a commercial license from the Municipality. Some documents must be submitted and our specialists in company incorporation can provide you with all the details and counselling to complete these procedures.
Registration obligations for foreign investors in Venezuela
Besides the steps mentioned above, which are mandatory for company formation in Venezuela, foreign businessmen must be aware that they have to comply with many other basic procedures. It must be noted that legal entities that are regulated by the Code of Commerce must apply for a tax identification number.
Additionally, it is required to apply for a license of operations issued by the Municipal Tax Authorities. This step is mandatory for companies that are set up for commercial purpose. For instance, if you will open a company in Venezuela operating as a professional enterprise, this step is not applicable.
As presented earlier, investors must set up a corporate bank account for the company incorporated in Venezuela. For this, they need to present the following:
- a valid identity card or a passport (the latter is mandatory for foreign investors who do not permanently reside in Venezuela);
- the tax identification number;
- details concerning the residency.
The 3 documents presented above are required for individuals, while companies must prepare the following:
- the articles of association signed in Venezuela;
- the excerpt issued by the Commercial Registry, which attests the registration of the entity.
Please mind that if you want to transfer goods, machinery and other assets that will be used for your company in Venezuela you will be asked to pay the current import taxes/excises, depending on the nature of the goods. Our consultants can provide more details on these taxes.
Also, we mention that as a foreign investor you are required to apply for the most suitable visa for investment/business (by suitable we mean that you can qualify for its requirements). Those who will hire foreign workforce must take care of the visa formalities applicable to this category of employees.
For this, our consultants in company registration in Venezuela remain at your service with professional assistance, tailored in accordance with the needs of your business and investment plans. For foreign employment matters, the procedure must be initiated with the Venezuelan consulate operating in the country where the foreign workforce has its habitual residence.
What is the tax system in Venezuela?
Many foreign investors will opt to invest in a foreign country because the respective jurisdiction offers a suitable investment environment, which can refer to the political and economic stability, the law applicable to foreign investments, its economic activities, the quality of the workforce and taxation.
Venezuela charges the same taxes than other countries have implemented in their national tax systems, such as the value added tax, the corporate tax, the withholding taxes and others. Therefore, it does not provide the same tax advantages that can be found in countries that allow offshore company formation.
Offshore company setup generally implies a lack of customary taxes and such countries as seen as tax havens, but investors in Venezuela can obtain various tax advantages. Currently, Venezuela charges a corporate tax rate of 34%.
Companies here are also VAT payers, and the standard rate is 16%. Withholding taxes also apply, as well as employment taxes. Our consultants can offer a full list of the current taxation system and the tax benefits you can obtain, based on the company type you want to set up here and the business sector.
You can also rely on us if you need accounting services for your company (and information on the reporting obligations imposed for your company type – they vary from one company type to another).
If you need further information or assistance in the process of forming a company in Venezuela, please ask our team for advice. We can also guide you through the steps of establishing other types of business entities in Venezuela or in other countries.