The Law for the Promotion of Non-oil Exports, published in Official Gazette No. 6,824 Extraordinary on July 18, 2024, enacted by the National Assembly and promulgated by the National Executive has, as its main objective, to establish and develop mechanisms to facilitate and promote the export of non-oil goods and services generated in Venezuela.
As stated at the beginning of this Law, its main objectives are divided into: i) economic diversification, in order to reduce Venezuela’s dependence on oil by promoting the export of other goods and services produced in the Bolivarian Republic of Venezuela; and ii) the facilitation of procedures through the elimination, automation and simplification of the administrative procedures related to exports and international promotion, improving the positioning of Venezuelan products in international markets in coordination with the Country Brand Institute (Instituto Marca País, in Spanish). This law also seeks to implement measures for positioning policies in international markets of Venezuelan goods and services, in coordination with the instructions of the Country Brand Institute (Instituto Marca País, in Spanish).
What is the “VUCE”?
The Foreign Trade Single Window (VUCE, for its acronym in Spanish) is the mechanism That will manage the procedures and permits required by the competent authorities related to the process of exporting non-oil goods and services produced in the Bolivarian Republic of Venezuela. The objective of this Window is to centralize, manage, simplify, optimize, and digitally unify the information and documentation necessary for the export process.
Individuals or legal entities, public, private, mixed and communal, national or foreign, interested in exporting non-oil goods or services must register in the VUCE and obtain the corresponding certificate, as an indispensable requirement to carry out any operation in the matter, as well as to access the benefits and incentives established in the law.
The use of this window is subject, for each transaction, to the payment equivalent to a fee of 150 times the official exchange rate of the highest value currency published by the Venezuelan Central Bank (Banco Central de Venezuela, in Spanish).
What benefits does this law provide for exporters?
Although there are already benefits, especially in terms of Value Added Tax (VAT), applicable to the export activity, such as the establishment of a 0% rate for exports, which is in line with the best practices of indirect taxation in international matters, as well as VAT recovery regimes for exporting taxpayers, this Law has provided for the possibility of expanding the catalog of tax incentives by contemplating:
- Reductions or suspensions of the tax burden: The National Executive may decree the reductions or suspensions of the tax burdens it deems necessary to promote the export of non-oil goods or services. In addition, all fees required for export related procedures will be consolidated in a single General Decree of Fees for Exports. In order to benefit from the tax incentives provided for in this Law, individuals and legal entities engaged in the export of non-oil goods and services must comply with the regulations issued by the Venezuelan Central Bank, related to the mandatory sale of a percentage of the foreign currency produced as a result of the export activity.
- Strategic sectors: The President of the Bolivarian Republic of Venezuela may establish strategic productive non-oil export sectors with special economic incentive regimes.
- Export credit insurance: The purpose is to establish a non-oil export credit insurance mechanism to cover the risk of non-payment of services or goods sold abroad.
- Export tax refund (draw back): The National Executive shall implement a procedure for determination, verification, certification, payment and competent authority for the tax refund of non-oil exports.
What is the National Export Fund?
The National Export Fund is created, attached to and administered by the export promotion agency for the purpose of financing activities related to the promotion of the export of non-oil goods and services. This Fund shall have the following income:
- The resources assigned by the National Executive.
- A contribution of up to zero point five percent (0.5%) of the value of imports under the terms established in the Resolution issued by the Ministry of the People’s Power with competence in matters of economy and finance. The contribution shall be paid by the respective importers at the time of liquidating the import customs tax.
- The goods coming from donations and other donations received.
- The resources obtained from its operations and the execution of its activities.
Export Promotion Agency
The National Executive will create an export promotion agency, attached to the Ministry of the People’s Power with competence in foreign trade matters, which will be the competent agency for the promotion of exports and the promotion of the positioning of non-oil goods and services in international markets.
What obligations do importers have under this new law?
A new tax is introduced, a contribution of up to 0.5% of the value of imports, which will be paid by importers at the time of liquidating the import customs tax. This contribution will be payable 30 days after the publication of the corresponding resolution of the Ministry of the People’s Power with competence in economy and finance.
At the time of issuing this Bulletin, the respective Resolution has not been issued and this is one of the most controversial aspects of this Law since it is increasing the already high tax burden for the country’s productive sector, in this case, for importers, and is creating a tax, delegating a large part of its regulation to sub-legal regulations.
How are these fees going to be determined?
All the fees required by the organs and entities of the Public Administration for the procedures and services required or rendered for the export of non-oil goods or services will be contained in a single administrative act to be called General Decree of Fees for Exports, which must be issued by the National Executive Office. The payment of fees not contained in the Decree will not be required.
Unified protocol for the standardization of export logistic processes
The President of the Bolivarian Republic of Venezuela shall issue a unified protocol in order to simplify and standardize all the necessary procedures or those related to exports at ports, airports, and land routes as well as the services related to the export process, carried out by the organs and entities of the State with competence in the matter.
The unified protocol shall incorporate the random control of the goods in the intrusive physical review procedures, which in no case shall exceed ten percent (10%) of the total of the goods to be exported. No formalities, reviews, inspections or payments that are not provided for in the unified protocol shall be required.
National Center for Foreign Trade (CENCOEX)
This Law ordered the suppression and liquidation of the National Foreign Trade Center (CENCOEX).
The functions regarding exports previously attributed to CENCOEX will now be assumed by the Ministry of People’s Power with competence in foreign trade matters.
The suppression and liquidation of the National Foreign Trade Center will be regulated by the President of the Bolivarian Republic of Venezuela by means of a Decree.
The transfer of competencies of the Foreign Trade Bank and the Venezuelan Foreign Trade Corporation referred to in this Law shall be completed within sixty (60) days following its entry into force.
When did this Law enter into force?
The Law for the Promotion of Non-oil Exports became effective as of the date its publication in the Official Gazette on July 18, 2024.
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