On 28 August 2022, Decree No. 4,7281 (“Decree“) which partially reforms the MERCOSUR Common Nomenclature (NCM),2 went into effect in Venezuela.
The Decree establishes a new sub-chapter in Chapter 98 of the NCM, “Imported Industrial Material for Productive Development” (IIMPD), which assigns a 0% ad valorem tariff to imports of authorized merchandise and exempts them from value-added tax (VAT).3 The duration of the exemption will be subject to the validity of the tax benefits established in the Decree of Customs Exemptions in accordance with Article 75 of the Organic Tax Code.4
The Decree adds new Sub-Chapter III regarding “Merchandise Destined to the Industrial, Economic and Productive Development” to Chapter 98 of the NCM. This sub-chapter establishes the tariff classification and authorizes the importation of merchandise under the IIMPD regime. It also implements a special customs policy that allows the importation of such merchandise under a unique customs identity, in single or partial shipments, but only when they constitute, as a whole, a combination of machinery aimed at developing a productive process identified in Legal Notes 3 and 4 of Section XVI of the MCN.5
1. Certificate of Exemption
Only merchandise that has the “Certificate of Partial Exemption under the IIMPD Regime” issued by the ministry with jurisdiction on matters of economy, finance and foreign commerce (“Certificate”) will enjoy the benefits of customs tariff exemption or deferral under the IIMPD. The Certificate will be valid for one year and it is renewable for up to two similar terms. During the validity of the Certificate, the ministry may modify its scope, including covered merchandise, revoke the Certificate and make any other modifications it deems legitimate.
The Certificate is non-transferrable, therefore, the holder is required to be the owner or recipient of the merchandise.6
In order to obtain a Certificate, a legal entity must meet the following requirements:
- The importation of the goods must be made under the terms and conditions under which the Certificate is issued.
- The importation of the goods must be made in a single or in partial shipments covered by one or more of the commercial invoices destined to the same consignee.
- The importation of the goods can only be performed through the customs office stated in the Certificate.
Non-compliance with the terms and conditions of the Certificate will result in fines established in Article 172 of the Organic Law of Customs7 and Article 112 of the Organic Tax Code.8
The Decree provides that the ministry may issue standards and procedures applicable to the application and processing of the Certificate by resolution and may incorporate or eliminate customs tariff codes and merchandise descriptions in accordance with the guidelines of the National Executive. To date, the ministry has not issued a resolution regarding this issue.
2. Tariff Headings
The Decree establishes the following customs tariff codes under Sub-Chapter III of Chapter 98 the NCM:
9841.00.00.10, 9841.00.00.20, 9841.00.00.30, 9841.00.00.40, 9841.00.00.41, 9841.00.00.42, 9841.00.00.43, 9841.00.00.44, 9841.00.00.50, 9841.00.00.51, 9841.00.00.52, 9841.00.00.60, 9841.00.00.70, 9841.00.00.80, 9842.00.00, 9842.00.00.10, 9842.00.00.20, 9842.00.00.30, 9842.00.00.40, 9842.00.00.41, 9842.00.00.42, 9842.00.00.43, 9842.00.00.44, 9842.00.00.45, 9842.00.00.46, 9842.00.00.47, 9842.00.00.50, 9842.00.00.51, 9842.00.00.52, 9842.00.00.53, 9842.00.00.54, 9842.00.00.55, 9842.00.00.60, 9842.00.00.61, 9842.00.00.62, 9842.00.00.63, 9842.00.00.64, 9842.00.00.65, 9842.00.00.66, 9842.00.00.67, 9842.00.00.68, 9842.00.00.70, 9842.00.00.71, 9842.00.00.72, 9842.00.00.80, 9842.00.00.81, 9842.00.00.82, 9842.00.00.83, 9842.00.00.84, 9842.00.00.85, 9842.00.00.86, 9842.00.00.90, 9844.00.00, 9844.00.00.10, 9844.00.00.20, 9844.00.00.40, 9844.00.00.80, 9844.00.00.90, 9848.00.00, 9848.00.00.10, 9848.00.00.20.
Among the goods these codes cover are: nuclear reactors; cartridges; machinery and devices for isotopic separation; boilers; motors; motor parts; turbines; hydraulic wheels and turbojets; liquid pumps of headings 84.13 and 84.14; machinery and devices of headings 84.15 to 84.19; liquid elevators; machinery and devices for air conditioning; industrial ovens; refrigerators and freezers of heading 84.18; lab devices or equipment; and, machinery and devices of headings 84.25 to 84.79.
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1 Published on 23 August 2022.
2 Decree No. 2,647 of 30 December 2016 adopted the MERCOSUR Common Nomenclature, which is based on the World Customs Organization Harmonized Commodity Description and Coding System (HS).
3 The Decree does not derogate from decrees No. 4,111, 4,684 of 5 February 2022, or 2 May 2022. The ad valorem tariff indicated in column three or four of Article 37 of Decree No. 2,647 was partially amended by Decree No. 4,111, dated 5 February 2020 (Official Gazette No. 4,111 dated 5 February 2020) and Decree No. 4,684, dated 2 May 2022 (Official Gazette No. 4,684 dated 2 May 2022).
4 Article 75 of the Organic Tax Code establishes that: “The maximum term of the exoneration benefit shall be one year. Upon expiration of the term of the exoneration, the Executive Branch may renew it up to the maximum term provided for in this article. The exonerations granted to non-profit institutions exclusively dedicated to religious and worship activities, as well as those determined in the provisions issued for such purpose by the National Tax Administration, may be for an indefinite period of time”. (Organic Tax Code published in Official Gazette No. 6,507 on 19 January 2020).
5 Similar treatment but with the same purpose as that of a single tariff classification (CAU), regulated in the Complementary Notes of Chapter 84 of the Customs Tariff.
6 Article 47 of the Organic Law of Customs establishes that: “…When the goods subject to a customs operation have been subject to release or suspension of duties, licenses, permits, delegations, restrictions, registrations or other tariff requirements, the accepting consignee or exporter or shipper must be the actual consignee or owner of the goods.” (Last paragraph) (Published in Official Gazette No. 42,446 on 23 August 2022).
7 Said article establishes that failure to comply with the obligations and conditions under which an authorization, delegation, permit, license, suspension or release has been granted, will be punished with a fine equivalent to double the import taxes legally caused, without prejudice to the application of the penalty of confiscation.
8 “Whoever, through action or omission, and without prejudice to the sanction established in Article 119, causes an illegitimate decrease in tax revenues, including through the undue enjoyment of exemptions, exonerations or other tax benefits, shall be sanctioned with a fine of one hundred percent (100%) up to three hundred percent (300%) of the omitted tax.” (Article 112, Organic Tax Code published in Official Gazette No. 6,507 of 29 January 2020).