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Companies in Venezuela, drowned by tax increases

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The private sector of Venezueladiminished after seven years of recession, warned of a “fiscal greed” due to the rise in municipal taxes of up to almost 10,000% since 2019, which led merchants to informality, which makes the path to economic recovery difficult, say businessmen.

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The president of National Council of Commerce and Services (Consecomercio), Tiziana Polesellsaid that, in just over two years, the tax rates that entrepreneurs must pay each month on their gross income went from 0.05% to 5% in most municipalities, which represents an increase of 9,900%.

This increase “dramatic” -explained Polesel- has caused some merchants to move to informality and others are considering it.

He also warned that the rise “voracious” of taxes has caused some merchants to move to municipalities where the tax burden, although high, is lower, and has caused owners of pharmacy, hardware and spare parts chains to close branches.

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“It is truly worrying how some merchants tell you that they are thinking of closing in certain states or moving to another municipality because the burden they have in the municipality where they are is unsustainable, they call it confiscatory. They tell you, in a colloquial way: ‘I’m working just to pay taxes, because I have nothing left’”assured.

hurdles to pay

The trade unionist explained that, in addition, some mayor’s offices prevent companies from declaring their taxes if they have not paid the “urban toilet” (garbage collection), whose rate increases have been “greater than 3,000%”.

This means that a delay in the payment of the service entails a block to pay the taxes and, therefore, a penalty for late payment that increases the tax even more.

The Federation of Chambers and Associations of Commerce and Production (Fedecamaras)the main employer in the country, denounced that the “fiscal greed” that exists “it could, in some way, make it much more difficult” the “road of recovery”.

He pointed out that the mayor’s offices have issued ordinances “that have even left the tax planning scheme” and have created “some parafiscal fees” charged by institutions for “allow” business operations in some regions.

To this, say the businessmen, is added the recent reform, by the national government, of the Tax on Large Financial Transactions (IGTF)by including a tax that levies 3% on payments made in foreign currency and which came into force as of last March.

According to official figures, Venezuela In the first five months of the year, it collected 8,015 million bolivars, which is equivalent to US$1,781 million at the official exchange rate, which represents 69.5% of the total for 2021, which was US$2,560 million.

Economists affirm that this improvement in collection is due to greater economic activity compared to 2021, which can be reversed if more companies join informality or reduce their activity due to the “fiscal greed”.

Like Polesel, the president of the Venezuelan Confederation of Industrialists (Conindustria), Luigi Pisellaassured that “many of the industries, especially the small and medium ones, have migrated to informality as they cannot bear the tax burden”.

He stressed that the manufacturing sector is in favor “to contribute to the treasury”and advocates “a culture” tax, so that it expands “the tax base, not increasing collection rates, which is what has been happening”.

He gave as an example that it is not the same for one person to carry a 100 kilo sack as for this weight to be distributed among ten people, who, then, would carry 10 kilo sacks each.

Source: Gestion

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