The Venezuelan market has been less active than other Latin American markets, mainly because of its political and economic instability, high inflation rates and strict foreign exchange control. Investments in Venezuela mainly continue to involve infrastructure, energy projects and regional or worldwide M&A transactions, which include the purchase of subsidiaries in Venezuela and the purchase of companies by local or international investors willing to bear the high risks of doing business in Venezuela in exchange for potential significant rewards if the current situation improves.
The government has enacted changes to the foreign exchange regime, which continues to restrict the ability to convert bolivares into foreign currency; nevertheless it has adopted a more flexible scheme than previous years by repealing certain laws and regulations that established criminal sanctions for individuals or entities conducting exchange transactions outside the official exchange mechanisms.
The most recent tax measures include (1) a temporary regime of VAT and income tax advance weekly payments applicable to certain designated taxpayers; (2) the increase of the standard VAT rate from 12 per cent to 16 per cent; (3) an income tax exemption for income derived from hydrocarbons production activities for the fiscal year 2018; and (4) the increase of the financial transactions tax from 0.75 per cent to 2 per cent.
II COMMON FORMS OF BUSINESS ORGANISATION AND THEIR TAX TREATMENT
The most commonly used forms of business organisations are:
- the corporation (SA);
- the partnership (SNC);
- the limited liability partnership (SCS);
- the limited stock partnership (SCA); and
- the limited liability company (SRL).
Investors generally prefer a corporate business form, and the SA is the most commonly used corporate form. The SA limits the liability of the shareholders to the subscribed capital.
The SA must have a stated or subscribed capital, which is the amount of capital that the shareholders of the corporation agree to subscribe. The SA's stated capital is represented by shares of stock in registered form (bearer shares are not permitted), with a par value. The shares must be subscribed by the shareholders. At least 20 per cent of the subscribed capital must be paid at the time of incorporation. In addition, under the Public Registry Law, the Commercial Registry Office may deny registration of the articles of incorporation in the event that it considers the capital insufficient for the purpose of the SA. Although there are no statutory minimum capital requirements applicable to the stated capital, each Venezuelan commercial registry sets out a minimum stated capital requirement on a case-by-case basis or depending on the purpose of the SA. The stated capital of the SA can be paid in cash or in kind. In the case of a payment in cash, at least 20 per cent of the stated capital must be paid by the shareholders at the time of the registration of the shareholders' meeting approving the incorporation of the SA or the corresponding capital increase (the amount of stated capital already paid by the shareholders is known as 'paid-in capital'). Payment in cash of the stated capital must be made by a deposit in bolivares in a bank account opened with a Venezuelan bank under the name of the SA. In the case of payment in kind, assets of a value equal to 100 per cent of the stated capital must be contributed to the SA.
The initial and any subsequent issuance of capital stock is subject to a tax of 1 per cent levied on the stated capital, plus other registration fees and expenses. Certain commercial registries of the Capital District apply a registration tax equal to 10 per cent of the stated capital. However, to mitigate the effects of this tax, shares may be subscribed at a premium. Although the SA must initially have at least two shareholders, it may subsequently become a wholly owned subsidiary of one shareholder.
The SA is a separate taxpaying entity. The SA's worldwide net income is levied with Venezuelan income tax at a corporate rate of up to 34 per cent. Dividends paid by an SA to either a resident or non-resident are subject to a dividends tax levied at a flat rate of 34 per cent to the extent that 'financial earnings' exceed 'net taxable earnings'. The transfer of an SA's shares by a legal entity is subject to 5 per cent Venezuelan income tax withholding, regardless of the legal entity's domicile. Sales of shares made by individuals are subject to a 34 per cent Venezuelan income tax withholding if the individual is not domiciled in Venezuela, or to a 3 per cent withholding if the individual is domiciled in Venezuela. Special tax treatment applies if shares are listed on a Venezuelan stock exchange.
The other corporate business form used in Venezuela is the SRL. The SRL is rarely used since its stated capital cannot currently exceed 2,000 bolivares. Like the shareholders of a corporation, members of the SRL enjoy limited liability. The capital of the SRL is represented by quotas. In the case of the transfer of a quota owned by a member, the other members have a preferential right to acquire such quota, and the transfer of the quota to third parties requires the approval of three-quarters of the SRL's capital. The process to incorporate an SRL is similar to that of setting up a corporation. Its by-laws may provide for mandatory cash contributions of the members, which will not be considered capital contributions. The SRL is subject to the same income tax treatment as the SA.
The SNC, the SCS and the SCA are the most commonly used non-corporate entities in Venezuela. The SNC is the Venezuelan partnership. The partners of an SNC are personally, jointly and severally liable for the debts, obligations and liabilities of an SNC. The contributions of the partners in an SNC are not represented by shares. The initial and subsequent capital contributions made by the partners to the SNC are subject to a 1 per cent tax. The SNC is fiscally transparent for income tax purposes. The SNC will report its taxable income in accordance with the Venezuelan Income Tax Law; however, it will not be taxed on such net income. The SNC's partners will be subject to income tax on their portion of SNC's taxable income and will have to report such income on an accrual basis. The assignment of the SNC's interest to an entity is subject to a 5 per cent Venezuelan income tax withholding levied on the cash consideration paid.
An SCS is the Venezuelan limited liability partnership. The SCS must be organised by one or more general partners, plus one or more limited partners. The general partners of an SCS are jointly and severally liable for the debts, obligations and liabilities of the SCS, whereas the limited partners are not liable for such debts, obligations or liabilities. The liability of the limited partners is limited to the amount they agree to contribute to the SCS. The contributions of the limited and general partners in the SCS are not represented by shares. A 1 per cent tax is levied on capital contributed by the limited partners. The SCS is fiscally transparent and taxed like the SNC as described above. The assignment of the SCS's interest by an entity is subject to a 5 per cent Venezuelan income tax withholding levied on the cash consideration paid.
The SCA must be organised by one or more general partners and one or more limited partners. The SCA is similar to the SCS, but the limited partners' interests in the SCA are represented by shares, which may be transferred as the shares of an SA.
The assignment of shares of the SCA by an entity is subject to a 5 per cent Venezuelan income tax withholding levied on the cash consideration paid. The SCA is treated as an SA (corporation) for Venezuelan income tax purposes.
The fiscally transparent entities (SNCs and SCSs) are used to achieve tax consolidation through fiscal transparency, as Venezuelan income tax law does not contain tax consolidation rules.
III DIRECT TAXATION OF BUSINESSES
i Tax on profits
Determination of taxable profit
Venezuelan-resident entities are generally subject to Venezuelan tax on their worldwide income at rates of up to 34 per cent set out in the progressive schedule provided in the Venezuelan Income Tax Law.
In general, the income tax is levied on net taxable income, which is calculated by subtracting from the annual gross revenue costs and allowable deductions (e.g., salaries, interest, amortisation, depreciation, technical assistance, and any expense that is 'normal and necessary' to generate income).
Expenses that are 'normal and necessary' to produce income may be deducted. Expenses are 'normal' if the amount of the disbursement made is in accordance with amount of income produced and the amount of disbursements customarily made by other taxpayers in the same line of business for similar expenses. Expenses are 'necessary' if there is a reasonable relationship with the business of the taxpayer.
In general, any reasonable depreciation or amortisation charge for fixed assets located in Venezuela assigned to income-producing activities is admissible. In general, the units of production depreciation method and straight-line depreciation method are admissible, among others. The 'exhaustion' amortisation method of depletion is allowed.
Taxable income must be reported on an accrual basis, except for income from wages and salaries, which is taxed on a cash receipt basis.
Calculation of taxable income tax liability also entails 'inflation adjustment', which is calculated as follows. The nominal value of a corporation's shareholders' equity at the closing of its fiscal year is multiplied by the Caracas consumer price index (the CPI), as published by the Central Bank of Venezuela. This adjustment is deductible as a loss in the calculation of the corporation's final tax liability. For example, if a company's shareholders' equity is 100 per cent and the CPI was 25 per cent, the company will be allowed to deduct 25 per cent in the calculation of its final income tax liability.
The nominal value of a corporation's 'non-monetary assets' (e.g., buildings, machinery, equipment and foreign currency amounts) is also multiplied by the Caracas CPI. The adjustment becomes a taxable gain that must be included in the calculation of its final income tax liability.
Taxpayers designated as special taxpayers by the tax authorities. as well as banks, insurance and financial companies, may not apply the adjustment for inflation for income tax calculation purposes.
Capital and income
There is no distinction between capital gains and ordinary income.
Foreign and domestic losses may be carried forward for three years and offset up to 25 per cent of the taxpayer's yearly taxable income. Losses may not be carried back. The losses can survive a change of ownership.
The schedule of income tax rates for corporate residents contains three rate-brackets:
- 15 per cent on taxable income up to 2,000 tax units;
- 22 per cent on additional taxable income up to 3,000 tax units; and
- 34 per cent on taxable income above 3,000 tax units.
The tax unit is a value for measurement set by the tax administration (SENIAT) before 15 February every year, and published in the Official Gazette. The adjustments to the tax units are made upon the variations of the CPI, as published by the Central Bank of Venezuela. Each tax unit is currently equivalent to 300 bolivares.
Income tax returns must be filed within three months of the end of the tax year of the taxpayer. SENIAT administers income tax and other national taxes such as value added tax (VAT), and municipal tax agencies administer municipal taxes such as the business activities tax, real property tax and vehicles tax. There are no regular routine audit cycles. Rulings may be requested on uncertain tax issues. Tax assessments may be appealed before the tax administration or challenged before tax courts.
There are no rules on consolidated tax grouping.
ii Other relevant taxes
VAT applies to sales of all goods and services throughout the chain of distribution, except certain exempted items such as food, medicine, telephones, domestic electricity and domestic natural gas. VAT is levied at a rate of 16 per cent. VAT taxpayers are charged VAT on all their purchases of goods and services (input credits). In turn, they have to charge and collect VAT in their sales of goods and services (output debits), effectively passing down the VAT to the end consumers. VAT liability (excess of output debits over input credits) is paid each week by VAT taxpayers to the Venezuela national tax administration.
Certain designated VAT taxpayers must (1) pay VAT advance payments on a weekly basis, based on the VAT payable the previous week, and (2) withhold 75 per cent of the VAT charged on all their purchases of goods and services, and pay the withheld amounts to the Venezuelan treasury on a weekly basis. Likewise, such designated VAT taxpayers are also subject to said VAT withholding on every sale of goods or services they make to other designated VAT taxpayers. This regime puts enormous pressure on such designated VAT taxpayers' cash flows.
A municipal tax on business activities is levied by the local municipalities on gross revenue (i.e., no deductions are allowed). The applicable rates vary from municipality to municipality and according to the business activity in which the taxpayer is engaged. The rates range from 0.5 per cent, and may reach as high as 2 per cent (or more).
Financial Transactions Tax (FTT)
The FTT applies to legal persons (not individuals) appointed as special taxpayers who are: (1) making payment transactions through Venezuelan banks or financial accounts, and (2) paying debts outside the financial system by means of payments, novation, offsetting and forgiveness of debts.
The FTT also applies to legal persons legally related to special taxpayers and to legal persons or individuals making payments on behalf of special taxpayers. The FTT rate is 2 per cent, and its tax base is the amount of the transaction.
Contribution to the National Organisation against Drugs
Commercial or industrial businesses that employ 50 or more workers must pay a special contribution to the National Organisation Against Drugs equal to 1 per cent of their 'business profits', which are defined as net profits obtained from business transactions. This tax is calculated and paid annually.
Contribution to the National Fund of Science, Technology and Innovation
Both companies domiciled in Venezuela and non-domiciled companies that carry out activities in Venezuela generating gross revenues in excess of 100,000 tax units must pay a special contribution to the National Fund of Science, Technology and Innovation. This contribution ranges between 0.5 per cent and 2 per cent of their gross revenues, depending on the type of business activity carried out. This tax is calculated and paid annually.
Contribution to the National Sports Fund
Both companies domiciled in Venezuela and non-domiciled companies that carry out activities in Venezuela obtaining net profits of at least 20,000 tax units must pay a special contribution to the National Sports Fund equal to 1 per cent of their net profits. This tax is calculated and paid annually.
Contribution to the Venezuelan Institute of Social Security
Employees must pay a contribution to the Venezuelan Institute of Social Security (IVSS), equal to 9 per cent, 10 per cent or 11 per cent of the lower of each employee's salary or five times the minimum monthly urban salary, for each employee (the IVSS salary base). The applicable percentage (9, 10 or 11 per cent) depends on the level of risk of the business activities (the higher the risk, the higher the percentage). Employees must also pay a contribution to IVSS equal to 4 per cent of the IVSS salary base, such contribution being withheld by the employer and paid by the employer to IVSS. These contributions must be paid on a weekly basis.
Contribution to the National Institute of Educational Cooperation
Employers with five or more employees must pay a contribution to the National Institute of Educational Cooperation (INCES) equal to 2 per cent of total wages, salaries, daily payments and remuneration of any kind, but excluding occasional payments such as extraordinary bonuses (normal salary). Employees must also pay a contribution to INCES equal to 0.5 per cent of any profit-sharing, such contribution being withheld by the employer and paid to INCES. These contributions must be paid by the employer within the first five days of each quarter.
Contribution to the Housing Saving Fund
Employers must pay a contribution to the Housing Saving Fund (FAOV) equal to 2 per cent of the monthly integral salary of each employee. Employees must also pay a contribution to FAOV equal to 1 per cent of their monthly integral salary, such contribution to be withheld or deducted by the employer and paid to the national housing bank, Banavih. These contributions must be paid on a monthly basis.
In a recent decision, the Constitutional Chamber of the Supreme Court of Justice stated that the mandatory contribution to FAOV shall not be considered a tax and shall not be subject to Venezuelan tax laws.
Unemployment or lay-off contingency
Employers must pay a contribution to IVSS for an unemployment or lay-off contingency equal to 1.7 per cent of the IVSS base salary, and employees must pay a similar contribution equal to 0.5 per cent of the IVSS base salary, such contribution being withheld or deducted by the employer and paid to IVSS. These contributions must be paid on a weekly basis.
Donations or gifts of assets located in Venezuela are generally subject to the Venezuelan gift tax levied at the rates of up to 55 per cent set out in the progressive schedule applicable depending on the relationship between the beneficiaries of the gift and the donor.
IV TAX RESIDENCE AND FISCAL DOMICILE
i Corporate residence
An entity is considered a Venezuelan resident if it is organised in accordance with Venezuelan laws or domiciled in Venezuela.
A non-locally incorporated entity may not become resident in Venezuela because it has a local seat of management or due to other factors, but it may have a permanent establishment in Venezuela if its place of effective management is in Venezuela.
ii Branch or permanent establishment
Foreign entities may operate in Venezuela through a permanent establishment. A branch, a fixed place of business, place of effective management and an agent with authority to enter into contracts will be considered a permanent establishment. The threshold for a foreign entity to have a permanent establishment in Venezuela is lower under the income tax law in comparison with the tax treaties in effect in Venezuela. Therefore, foreign entities entitled to the benefits of a tax treaty may be protected in certain situations from having a permanent establishment in Venezuela.
The permanent establishment is taxed on income attributable to the permanent establishment's activities. Income that the permanent establishment might be expected to make if it will be a separate and distinct entity will be attributable to the permanent establishment. Deductions of expenses incurred for the purpose of the permanent establishment are allowed, including executive and general administrative expenses. Interest, technical assistance fees or royalties payments made to the head office and its affiliates are not deductible, but interest, fees and royalties paid to other entities are deductible.
The Venezuelan branches of foreign legal entities are subject to a deemed dividend tax on their earnings. The deemed dividends tax is levied at a flat rate of 34 per cent on the excess amount of the branch's 'financial earnings' over the branch's 'net taxable income'. The deemed dividends tax is exempted if the branch reinvests in Venezuela the amount subject to the deemed dividends tax and the investment is maintained in Venezuela for five years.
V TAX INCENTIVES, SPECIAL REGIMES AND RELIEF THAT MAY ENCOURAGE INWARD INVESTMENT
i Holding company regimes
No special holding company regimes are available in Venezuela.
ii IP regimes
No special IP regimes are available in Venezuela.
iii State aid
The tax incentives for new investments were eliminated in the 2015 Income Tax Law amendment.
Venezuela has signed treaties for the avoidance of double taxation with Austria, Barbados, Belarus, Belgium, Brazil, Canada, China, Cuba, the Czech Republic, Denmark, France, Germany, Indonesia, Iran, Italy, Korea, Kuwait, Malaysia, the Netherlands, Norway, Palestine, Portugal, Qatar, Russia, Spain, Sweden, Switzerland, Trinidad and Tobago, the United Arab Emirates, the United Kingdom, the United States and Vietnam. These agreements provide significant protection to investors against changes in tax legislation.
VI WITHHOLDING AND TAXATION OF NON-LOCAL SOURCE INCOME STREAMS
i Withholding on outward-bound payments (domestic law)
Dividends paid by a Venezuelan corporate entity to either a resident or non-resident are subject to a 34 per cent withholding levied on the distributed excess amount of the corporate entity's 'financial earnings' over its 'net taxable earnings'.
Interest payments made to non-resident entities are subject to a withholding levied at a progressive corporate rate of up to 34 per cent on 95 per cent of the payment. Interest payments made to qualified financial institutions domiciled outside Venezuela are subject to a withholding tax of 4.95 per cent.
Payments of royalties to a non-domiciled entity are subject to a withholding levied at the progressive corporate rate of up to 34 per cent on 90 per cent of the gross payment.
Payments of technical assistance fees to a non-domiciled entity are subject to a withholding levied at the progressive corporate rate of up to 34 per cent on 30 per cent of the gross payment.
ii Domestic law exclusions or exemptions from withholding on outward-bound payments
Interest payments on bonds issued by Venezuela are exempted from withholding, whereas payments in kind are not.
iii Double tax treaties
The table in Appendix I summarises the withholding rates on dividends, interest and royalty payments under each of the tax treaties currently in effect in Venezuela.
iv Taxation on receipt
Dividends paid by a Venezuelan corporation to either a resident or non-resident are subject to a dividend tax levied at a flat rate of 34 per cent to the extent that the 'financial earnings' of the Venezuelan corporation exceed its 'net taxable earnings'. Dividends paid by a Venezuelan corporation out of dividend distributions received from other Venezuelan corporations are not subject to the dividend tax.
There is no indirect credit for local or foreign underlying taxes. Therefore, dividends paid by a foreign corporation to Venezuelan residents out of dividend distributions received by such foreign corporation from Venezuelan corporations are subject to 34 per cent dividends tax.
VII TAXATION OF FUNDING STRUCTURES
i Thin capitalisation
Under the thin capitalisation rules, interest on related-party debt will be deductible for tax purposes provided the 1:1 debt-to-equity ratio is not exceeded. In calculating whether the amount of debt exceeds the taxpayer's net equity, the taxpayer's annual average net equity must be subtracted from the annual average related-party debt.
ii Deduction of finance costs
Finance costs are generally deductible. Interest expenses incurred in connection with income production should be deductible, provided that the interest paid is in accordance with the amount of income produced.
iii Restrictions on payments
Dividends must be distributed from liquid and collected earnings.
iv Return of capital
Equity capital can be repaid by a reduction or return of capital, and it is tax-neutral.
VIII ACQUISITION STRUCTURES, RESTRUCTURING AND EXIT CHARGES
Non-local companies acquiring local businesses generally structure the transaction using a local entity. Buyers generally structure financing through loans, because interest payments under such loan will be deductible. It is common that the consideration for sellers is paid with negotiable instruments to avoid the income tax withholding applicable to cash considerations.
Mergers are generally considered tax-neutral. There are no rules on demerging. A merger between a local and a non-local entity is not contemplated in the law, but could be implemented through the domestication of one of the entities in the jurisdiction of the other entity.
Entities may be deregistered in Venezuela and relocated in another jurisdiction. There are no applicable taxes on the relocation of a Venezuelan entity.
IX ANTI-AVOIDANCE AND OTHER RELEVANT LEGISLATION
i General anti-avoidance
General anti-avoidance provisions grant the tax administration the power to disregard legal forms adopted by the taxpayer with the main intention of evading taxes. The isolated court decisions on abuse of legal forms in the tax context provide that legal forms with a prevailing 'business purpose' should not be disregarded by the Venezuelan tax administration.
ii Controlled foreign corporations
The Income Tax Law generally requires reporting of income, and imposes disclosure obligations on Venezuelan residents with direct or indirect controlled interests in foreign entities and other investments organised, located or resident in any of the jurisdictions considered as low-tax jurisdictions when a resident exercises management or control over such investments. Control over investments is defined as the ability to decide the timing of the distribution of profits, yields or dividends derived from the investment. The control requisite is presumed, but the taxpayer may rebut such presumption.
Venezuelan taxpayers are required to accrue into their Venezuelan taxable income the gross income derived from an investment in a low-tax jurisdiction (either directly or indirectly) without any deductions taken by the latter in computing net income. However, such amounts may be deducted in computing a Venezuelan resident's taxable income if the accounting records of the investment in a low-tax jurisdiction are maintained in Venezuela, and made available to the Venezuelan tax authorities.
iii Transfer pricing
SENIAT has created a transfer-pricing department formed by professionals specialised in transfer-pricing issues. Since its creation, SENIAT has become very strict about and aware of transactions made by Venezuelan companies with related parties.
In fact, SENIAT has been auditing Venezuelan companies undertaking transactions with foreign related parties in order to verify if such transactions comply with the existing arm's-length standards. Tax audits have been undertaken in order to verify if interests and royalties paid by a foreign company to its related company in Venezuela, or vice versa, were agreed at fair market value.
The transfer pricing methods that are currently in force in Venezuela are basically identical to those contained in the OECD Guidelines:
- the comparable uncontrolled price (CUP) method;
- the resale price method;
- the cost plus method;
- the profit-split method; and
- the transactional net margin method.
There is a preferred method rule that requires the taxpayer to document the rationale for its choice of methodology. The first method that must be evaluated for use by the taxpayer must be the CUP method.
iv Tax clearances and rulings
There are no tax clearances or rulings generally required to acquire a local business. Rulings may be requested on uncertain tax issues.
X YEAR IN REVIEW
Over the past year, the government has tried to implement measures to ease the exchange control regime and certain tax measures to increase revenue. However, high levels of inflation, maxi-devaluation of the currency and estimations that gross domestic product will shrink about 18 per cent in 2018 (IMF) have led to a poor economic forecast for 2019. Therefore, the priority will be to maintain existing business activity.
XI OUTLOOK AND CONCLUSIONS
The tax burden of Venezuelan and foreign companies carrying on economic activities in Venezuela has significantly increased. Income obtained by the Venezuelan government has become insufficient to subsidise public expenses. By creating new special contributions and by increasing tax rates, the government aims to obtain more resources to meet public expenses and subsidise social projects.
Despite its economic setback, Venezuela continues to be a country with significant business opportunities for foreign investors willing to assume risks for a number of reasons:
- Venezuela is one of the largest Latin American economies, given its status as one of the world's largest oil producers and exporters;
- Venezuela has the fifth-largest proven oil reserves in the world (and the largest in the western hemisphere) and the second-largest proven natural gas reserves in the western hemisphere;
- the devaluation of the local currency has made Venezuela very competitive in terms of labour and other local costs if compared with other countries of the region;
- the Venezuelan government has engaged in infrastructure and other strategic projects with foreign investors under contract, providing for payments in foreign currency and in certain cases for international arbitration to settle potential disputes; and
- the level of M&A activity in Venezuela could increase owing to potential important oil and gas projects in the Orinoco Belt region during 2018, as the Venezuelan government will probably have to negotiate more advantageous conditions with the international oil companies to attract the badly needed foreign investment in the sector currently affected by low oil prices.
In light of this political and economic environment, doing business in Venezuela involves significant risk, but continues to provide opportunities for high returns.
Appendix I: Treaty rates for dividends, interest and royalties
|Austria||5 per cent if the shareholder is an entity that directly controls at least 15 per cent of the capital of the distributing entity. 15 per cent in all other cases||4.95 per cent on interest paid to banks
10 per cent on other interest payments
|5 per cent|
|Barbados||5 per cent if the shareholder directly controls at least 5 per cent of the capital of the distributing entity. 10 per cent in all other cases.||5 per cent on interest payments to banks
15 per cent other interest payments
|10 per cent|
|Belarus||5 per cent if the shareholder directly or indirectly owns at least 25 per cent of the capital of the distributing entity. 15 per cent in all other cases||5 per cent||5 per cent copyright and leases
10 per cent other royalties
|Belgium||5 per cent if the shareholder directly or indirectly owns at least 25 per cent of the capital of the distributing entity. 15 per cent in all other cases||10 per cent||5 per cent|
|Brazil||10 per cent if the shareholder is a corporation that directly or indirectly controls at least 20 per cent of the capital of the distributing entity. 15 per cent in all other cases||15 per cent||15 per cent|
|Canada||10 per cent if the shareholder controls 25 per cent of the capital of the distributing entity. 15 per cent in all other cases||10 per cent||5 per cent copyright except on videos
10 per cent other royalties
|China||5 per cent if the shareholder is a corporation that directly controls at least 10 per cent of the capital of the distributing entity. 10 per cent in all other cases||5 per cent on interest payments to banks
10 per cent other interest payments
|10 per cent|
|Cuba||10 per cent if the shareholder is a corporation that directly controls at least 25 per cent of the capital of the distributing entity. 15 per cent in all other cases||10 per cent||5 per cent|
|Czech Republic||5 per cent if the shareholder is a corporation that directly controls at least 15 per cent of the capital of the distributing entity. 10 per cent in all other cases||10 per cent||12 per cent|
|Denmark||5 per cent if the shareholder controls 25 per cent of the capital of the distributing entity. 15 per cent in all other cases||5 per cent||10 per cent|
|France||5 per cent or exempted if the shareholder directly or indirectly owns at least 10 per cent of the capital of the distributing entity||5 per cent||5 per cent|
|Germany||5 per cent if the shareholder owns at least 15 per cent of the capital of the distributing entity. 15 per cent in all other cases||5 per cent||5 per cent|
|Indonesia||10 per cent if the shareholder directly controls at least 10 per cent of the capital of the distributing entity. 15 per cent in all other cases||10 per cent||20 per cent royalty payments
10 per cent technical assistance fees
|Iran||5 per cent if the shareholder is a corporation that directly controls at least 15 per cent of the capital of the distributing entity. 10 per cent in all other cases||5 per cent||5 per cent|
|Italy||10 per cent||10 per cent||7 per cent copyright
10 per cent other royalties
|Korea||5 per cent if the shareholder is a corporation that directly controls at least 10 per cent of the capital of the distributing entity. 10 per cent in all other cases||5 per cent on interest payments to banks
10 per cent on other interest payments
|5 per cent lease payments
10 per cent on other distributions
|Kuwait||5 per cent if the shareholder is a corporation that directly owns at least 10 per cent of the capital of the distributing entity. 10 per cent in all other cases||5 per cent||20 per cent|
|Malaysia||5 per cent if the shareholder is a corporation that directly controls at least 10 per cent of the capital of the distributing entity. 10 per cent in all other cases||15 per cent||10 per cent|
|Netherlands||10 per cent or exempted if the shareholder controls at least 25 per cent of the capital of the distributing entity||5 per cent||5 per cent leases and other royalty payments
7 per cent trademarks
10 per cent copyright
|Norway||5 per cent if the shareholder directly controls 10 per cent of the capital of the distributing entity. 10 per cent in all other cases||5 per cent interest paid to banks
15 per cent other interest payments
|12 per cent royalties
9 per cent technical assistance fees
|Palestine||10 per cent if the shareholder directly controls 10 per cent of the capital of the distributing entity. 15 per cent in all other cases||5 per cent||10 per cent|
|Portugal||10 per cent||10 per cent||12 per cent royalties
10 per cent technical assistance fees
|Qatar||5 per cent||5 per cent|
|Russia||10 per cent if the shareholder is a corporation that directly controls at least 10 per cent of the capital of the distributing entity and invested at least US$100,000 in such entity. 15 per cent in all other cases||5 per cent on interest paid to banks and
10 per cent on other interest payments
|15 per cent royalties
10 per cent technical assistance fees
|Spain||10 per cent or exempted if the shareholder controls 25 per cent of the capital of the distributing entity||4.95 per cent on interest payments to financial institutions or 10 per cent other interest payments||5 per cent|
|Sweden||10 per cent or exempted if the shareholder controls at least 25 per cent of the capital of the distributing entity||10 per cent||10 per cent copyright
7 per cent other royalties
|Switzerland||10 per cent or exempted if the shareholder controls at least 25 per cent of the capital of the distributing entity||5 per cent||5 per cent|
|Trinidad and Tobago||5 per cent of the gross amount of the dividends if the beneficial owner is a company that holds directly or indirectly at least 25 per cent of the capital of the company paying the dividends. 10 per cent in all other cases||15 per cent||10 per cent|
|United Arab Emirates||5 per cent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) that holds directly at least 10 per cent of the capital of the company paying the dividends. 10 per cent in all other cases||10 per cent||10 per cent|
|United Kingdom||10 per cent or exempted if the shareholder directly or indirectly controls at least 10 per cent of the voting rights of the distributing company||5 per cent||7 per cent copyrights
5 per cent other royalties
|United States||5 per cent if the shareholder owns at least 10 per cent of the voting shares of the distributing company. 15 per cent in all other cases||4.95 per cent on interest paid to financial or insurance institutions and 10 per cent on other interest payments||5 per cent lease payments
10 per cent other royalty payments
|Vietnam||10 per cent if the shareholder is a corporation that directly controls at least 10 per cent of the capital of the distributing entity. 15 per cent in all other cases||10 per cent||10 per cent|
1 Alberto Benshimol and Humberto Romero-Muci are partners at D'Empaire.