The following legal instruments were recently enacted: (i) Law for the Protection of Social Security Allowance against the Imperialist Blockade (the ‘‘Law’’) published in Special Official Gazette of the Bolivarian Republic of Venezuela No. 6,806 of May 9, 2024; (ii) Decree No. 4,952 of May 16¹ that sets forth the amount of the special contribution referred to in the Law (the ‘‘Decree’’); and, (iii) Regulation No. SNAT/2024/000042 issued by the National Integrated Service of Custom and Tax Administration (‘’SENIAT’’), published in Official Gazette No. 42,881 of May 17, 2024 (the ‘‘Regulation’’).

We will review the most important aspects of the Law, the Decree, and the Regulation.

1. Scope

• The purpose of the Law is to establish the appropriate mechanism for the protection of social security pensions in spite of the adverse effects of coercive actions and other restrictive measures imposed to Venezuela.
• The contribution is independent (‘‘Special Contribution’’) of the employee contributions to the Venezuelan Social Security Institute (‘‘IVSS’’).

2. Special contribution

• The Law is only applicable to private entities of any kind,, domiciled or not in Venezuela or not, legally established or not, of any kind, that do business in within the territory (the ‘‘Taxpayer’’).

3. Amount

• The Decree establishes nine percent (9%) of the total payments made by Taxpayers to their employees as salary or non-salary bonus (tax base) as amount of the Special Contribution.
• The Law sets forth that the National Executive shall establish the percentage of the Special Contribution on an annual basis but limited in all cases to fifteen percent (15%) of the total payments made by the Taxpayer to its workers for salary and non-salary bonuses.
• In no case, shall the basis for the calculation of the aforementioned Contribution be less than the minimum broad indexed monthly income decreed by the Executive from time to time (minimal tax base)

The Regulation establishes that the tax base used to calculate the Special Contribution in the case of payment of salary and non-salary bonus in foreign currency, shall be the equivalent amount in Bolivars at the exchange referential rate published by the Central Bank of Venezuela calculated at the date of payment of the pertinent compensation.

4. Exonerations

• The National Executive may partially or totally exonerate the payment of this Contribution to specific taxpayers and strategic business sectors for the foreign investment promotion and national development as defined in the terms and conditions of the enabling decree from the payment of this Contribution.
• The Decree exonerates all entrepreneurs registered in the National Registry of Entrepreneurs.

5. Payment of the contribution and deductibility

• The declaration and payment of this Special Contribution shall be filed monthly, following the last digit of the Tax ID of each taxpayer on the designated calendar dates established under Article 1 of the Regulation.
• The Declaration and payment of the Special Contribution shall be filed following the formalities and technical specifics posted by the SENIAT in its website http//www.seniat.gob.ve.
• The Taxpayer shall inform the number of active employees in their payroll every quarter, according to the technical specifics posted on the website of the SENIAT.
• The amount paid for the special contribution will be deductible as an expense at the time of determining the income in the employer's final Income Tax declaration.

6. Auditing and sanctions

• Failure to declare the Special Contribution referred to in the Law or late declaration shall be sanctioned punished by a fine of one thousand (1,000) times the official referential exchange rate of the currency of greatest highest value currency as published by the Central Bank of Venezuela.
• Failure to pay or late payment of the Special Contribution, as well as breaching any tax obligation, shall be sanctioned in accordanceaccordance with the rules of the Tax Code.

7. Validity

• The legal instruments shall enter into force as the date ofupon their publication in the Official Gazette.

[1] Article 1, Decree No. 4,952, Official Gazette No- 42,880, of May 16, 2024.