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In brief

The Presidential Press’1 and the Ministry of Habitat and Housing’s2 Twitter accounts announced on August 9, 2020 the execution of the “National Agreement of Municipal Tax Harmonization” (“Agreement”), prepared by the Bolivarian Council of Mayors of Venezuela3 to harmonize municipal taxes in 305 Venezuelan municipalities. (Venezuela has 335 municipalities).  Click here to see a copy of the Agreement, dated July 29, 2020. (available only in Spanish)


Decision No. 0078 of the Constitutional Chamber of the Supreme Court of Justice of July 20, 2020 motivated the creation of the Agreement. That decision suspended the application of any tax or contribution created by states and municipalities for 90 days and ordered the Sectorial Vice President for the Economy and Minister of the Public Power for Industry and Production to form a technical group with governors, mayors and the head of government of the Capital District, to harmonize municipal and state taxes rates.4 We will assume that the Agreement will apply in practice. However, there are strong arguments to submit that decision No. 0078 and the Agreement are unconstitutional and illegal.

The Agreement:

  1. Harmonizes the rates of the municipal tax on economic activities and establishes caps. This tax usually creates double and multiple taxation issues to taxpayers operating in various municipalities.

    The rates established in the Agreement may result very high because they tax monthly gross income adjusted for price increments, without considering the crisis that Venezuela already has (besides the COVID-19 pandemic), where companies are in survival mode with limited or insufficient cash flow. Some municipalities that have lower rates will probably approve the maximum rates established in the Agreement. The contrary case could occur for municipalities that have rates above the Agreement’s caps.

    The Agreement also plans to tax the primary sector and mineral exploitation, matters over which municipalities have no taxing power, because they correspond to the national (federal) power or, with non-metallic minerals, to states.

  2. Simplifies and unifies the classification of economic activities in 22 activities.
  3. Establishes the creation of a sole registry for municipal taxpayers that will allow municipal tax administrations to exchange information and supervise in real time taxpayers with branch offices in different municipalities, avoid double taxation and verify any tax return filed in one municipality as filed and paid in another municipality. The Bolivarian Council of Mayors will administer the registry, which may compromise municipal autonomy.
  4. Prohibits the collection of taxes in foreign currency, even though it approves the use of the Venezuelan crypto-asset PETRO,5 as a unit of account for the dynamic calculation of municipal taxes and sanctions. Because the PETRO is calculated based on the price of raw materials that form part of the Venezuelan commodities basket, which itself is priced in US Dollars, 6 the Agreement violates decision No. 0250 of August 8, 2019 of the Constitutional Chamber of the Supreme Court of Justice, which suspended the effects of some ordinances from the Municipality of Chacao that created fiscal value units for taxes and sanctions anchored to the exchange market.7
  5. Approves a value chart for constructions and terrains in PETROS per square meter, which will apply for cadastral valuation, cadastral registration, construction permits, occupational records, the determining the municipal urban real estate tax and some formulas and rates for municipal services related to real estate. The new values will also affect the calculation of the new federal high net worth tax.8 The Agreement does not specify the technical criteria used to establish the value of a square meter according to the type of real estate property and the rates for the mentioned municipal services. Therefore, the established values and rates may result arbitrary and divorced from the market reality.
  6. Creates a service for advising and certifying standards to create and update virtual and digital systems of municipal tax administrations and established a model adhesion convention to the Agreement that municipalities must sign to “Modernize and harmonize the tax authorities of the Bolivarian Council of Mayors for the municipalities of the Republic.”
  7. Urges all Municipal Councils to make reforms, derogations and/or creations of municipal ordinances through legislative emergencies to guarantee compliance with the Agreement in 30 days.
Spanish version

4 V. Baker McKenzie, Venezuela: The Vargas Municipality of La Guaira State issued a Special Ordinance on the Tax on Economic Activities of International Commercial Exchange, on, consulted on August 9, 2020 and Constitutional Chamber of the Supreme Court of Justice, decision No. 0078 of July 7, 2020, case: Juan Ernesto Garantón Hernández v. Municipality of Chacao, on, consulted on July 9, 2020.
5 V. Background and related information: Baker McKenzie, “Constitutional Decree on Crypto-assets and the Sovereign Cryptocurrency Petro”, in“The National Assembly declares the nullity of the Petrocurrency”, in:“Obligation to register economic information and events expressed in Sovereign Crypto-assets”, in“Regulations for the Accounting Registries of Transactions with Cryptoassets in Venezuela” in“The Venezuelan Government ordered governmental bodies to sell certain goods and services, liquidate and demand payment of certain services and fees in Sovereign Cryptoassets” in:; and “New Regulations for Exchange and Allocation Operations of Cryptoassets through Specialized Cryptofinancial Services in Venezuela” in:, consulted on August 9, 2020.
6 PETRO’s White Book establishes that its value is backed by the Venezuelan commodities basket, which includes a relation of petroleum 50%, gold 20%, iron 20% and diamond 10%. Even though the oil market has had serious contractions, the value of the PETRO has not been affected (PETRO 1.00/ USD 58.70, consulted on August 11, 2020 in:
7 V. Constitutional Chamber of the Supreme Court of Justice, No. 0250 of August 8, 2020, case: Juan Ernesto Garantón Hernández v. Chacao Municipality, in, consulted on July 9, 2020.
8 V. Baker McKenzie, “The Venezuelan National Constituent Assembly approved a new tax of 0.25% on high net worth”, in“The National Constituent Assembly substantially modified the Law that created the high net worth tax in Venezuela, unconstitutionally establishing its retroactive application” in; and Impuesto a los Grandes Patrimonios: Registro de Vivienda Principal”, in, consulted on August 9, 2020.

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Ronald Evans is managing partner in Venezuela, and chairs the Firm's Global Wealth Management practice group as well as the Tax Practice in Venezuela. He represents Latin America in the Firm's Tax Policy Group, and is highly recommended by various legal directories. He was the first chief of the Venezuelan tax administration’s (SENIAT) international affairs division, and served as Venezuela’s official negotiator for double taxation treaties from 1994 to1996. Ronald was an advisor to the minister of foreign affairs on double taxation issues from 1997 to 1999. He has chaired the Venezuelan branch of the International Fiscal Association since 2007, and is a member of STEP’s Advisory Committee for Latin America.


José P. Barnola Jr. joined Baker McKenzie in 1996 and became partner in 2003. He is a senior member of the Venezuela tax practice group and counsel of the tax practice group in Mexico, and has extensive experience in tax advice, transactional tax and tax litigation. José has authored over 30 legal articles on several legal and tax issues published in Venezuela, United States, Canada and México (see list in and has over 18 years' experience as tax law professor. He has written and spoken on investment protection and tax planning, cross-border distribution activities, corporate reorganizations, VAT, tax litigation, employee taxation and other hot topics of the Venezuelan tax system. Since 2018, José has been based in Baker McKenzie's office in Mexico City on a special temporary assignment, where he provides complex planning and transactional investment protection and tax advice, especially for the oil and gas industry, as well as tax litigation. José is the Latin America representative in Baker McKenzie's Tax Dispute Resolution Global Steering Committee, in charge of designing and implementing the global, regional and local strategic plans of the Firm.


Oscar Morean is a partner in the Firm’s Caracas office where he previously served as a senior associate for five years before starting a local boutique corporate and tax law firm. He has over two decades of experience advising on tax and corporate law matters across Venezuela’s leading industries and most important practice areas, including pharmaceutical and oil and gas verticals, taxation, litigation, capital repatriation, tax treaties interpretation, and wealth and estate planning. Oscar has extensive experience advising key players, family groups, and multinational corporations engaged in import and export activities. He graduated from the Universidad Catόlica Andrés Bello and holds an LLM in Taxation degree from the Universidad Central de Venezuela and an LLM in International Taxation from the University of Florida. He has also completed an executive program on negotiation at Harvard Business School. Oscar has been invited as a guest speaker at tax conferences in Latin America and has been a law professor in the most prominent law schools in the country.