Tax Treatments Of Branches And Subsidiaries Compared

Branches of foreign companies are subject to the same tax rules as Venezuelan companies. Branches qualify for the 20% investment tax credit when they are engaged in the activities listed in "INVESTING IN VENEZUELA" under 'Investment Incentives'. All entities may obtain the incentives given for research and development and pollution control.

A branch may be converted into a subsidiary. Foreign investors must tell the Mercantile Registry and Superintendency of Foreign Investments of the conversion. Conversion can take place without being treated as a sale and, therefore, without tax consequences. The tax consequences of a conversion that is effected by a sale should be considered carefully.