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6.1 Fair Tax Regime
6.2 Professional Services
6.3 Capital Markets
In-Country Assessment Information

6. Appropriate Regulation

Goal – A comprehensive regulatory regime that is transparent, efficient, simple in its implementation and that leads to accurate reporting of property values and prudent protection from market risks

  

6.1 Fair Tax Regime

Core Question: Do market participants feel the overall tax rate is fair and participate in formal transactions? The tax rate is considered by market participants to be unusually high. Therefore, the market is weak. Corporate income tax varies between 15% and 34%.

Source: Venezuela Tax Guide 2013, PKF International

Transfer Tax

6.1.1   What is the total property transfer tax including all duties and payments? The total property transfer tax, including all duties and payments is very strong in Venezuela, 2.5%.

Overall Tax

6.1.2   What is the overall tax rate on entrepreneurs(as a percentage of profits)? Very weak, Venezuela has a ranking of 187. Trend ↑ from 188 in 2013. The total tax rate (% profit) is 61.7%.

Source: Doing Business 2014 – Paying Taxes & Registering Property, World Bank
http://doingbusiness.org/data/exploreeconomies/venezuela

6.1.3 Divestment

Survey Question

SQ 24  What is the tax on profits for foreign investors when divesting property?   Tax on profits for foreign investors in Venezuela is weak. Capital gains tax is roughly 34% for corporations or individuals that are non-residents.

Source: PwC 2012-2013, Real Estate Going Global
http://www.pwc.com/en_GX/gx/asset-management/publications/pdfs/pwc-real-estate-going-global.pdf

 

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6.2 Professional Services

Core Question:  Are the professional services necessary for efficient and transparent property markets available and appropriately regulated and supervised?  No, professional services are a fairly new concept in Venezuela. Not to mention that the real estate industry is highly regulated by the influence of the government.

6.2.1 Asset Valuers

Survey Questions

SQ 25  Are property valuers licensed and/or certified by the government?  No, Valuers are certified by SOITAVE (Sociedad De Ingenieria De Tasación En Venezuela). This is part of the Venezuelan Association of Engineering.

Source: Interview with Vilma Diaz (Brokerage Service Director) of CBRE Venezuela, July 9, 2014.

SQ 26   How effective are mechanisms in place to discipline valuers who engage in misconduct? Weak, not too many mechanisms are in place. However, with each appraisal done, a certification number must be adhered to it, deterring valuers from misconduct.

Source: Interview with Vilma Diaz (Brokerage Service Director) of CBRE Venezuela, July 21, 2014.

6.2.2 Brokers & Agents

Survey Questions

SQ 27  Are real estate brokers and agents licensed and/or certified by the government? No, weak. Real estate brokers and agents are licensed through the Venezuelan Real Estate Chamber.

Source: Interview with Vilma Diaz (Brokerage Service Director) of CBRE Venezuela, July 9, 2014.

SQ 28  How effective are mechanisms in place to discipline brokers or agents who engage in misconduct?  Very weak. Few mechanisms are in place to discipline professionals who engage in misconduct.

Source: Interview with Vilma Diaz (Brokerage Service Director) of CBRE Venezuela, July 9, 2014.

6.2.3 Mortgage Professionals

Survey Questions

SQ 29  Are mortgage professionals licensed and/or certified by the government? No. Mortgage professionals work directly for the banks.

Source: Interview with Vilma Diaz (Brokerage Service Director) of CBRE Venezuela, July 28, 2014.

SQ 30  How effective are mechanisms in place to discipline mortgage professionals who engage in misconduct? Not applicable since they work for banks.

 

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6.3 Capital Markets

Core Question: Are capital markets well-regulated and diversified enough to provide financial resources to private-sector entrepreneurs and innovators? No, Venezuelan markets are not transparent and highly discourage Foreign Direct Investment. On top of which, the Venezuelan government lacks regulation in terms of security exchanges. Venezuela is very weak in terms of capital markets and financial resources.

Capital Flows

6.3.1  How restricted is the flow of capital into and out of the country? Very weak, Venezuela ranks 148 out of 148 with a score of 1.66 (1 being the weakest, and 7 being the strongest). Regulations in Venezuela highly discourage Foreign Direct Investment.

Source: Global Competitiveness Report 2012-2013 – World Economic Forum
http://www.weforum.org/issues/global-competitiveness

Security Exchanges

6.3.2  Is the regulation of securities exchanges transparent, effective and free of influence from government and industry? No, Venezuela is not free from influence of the government in terms of securities. Venezuela ranks 117 (very weak) out of 148 with a score of 3.30 (1 being the weakest, and 7 being the strongest).

Source: Global Competitiveness Report 2012-2013 – World Economic Forum
http://www.weforum.org/issues/global-competitiveness

Securitization

6.3.3   What is the depth of asset-backed securities, mortgage-backed securities, high-yield bonds and highly leveraged loans? Venezuela ranks 22 out of 62 with a score of 2.1 out of 7. Venezuela’s ranking makes it a strong country for securitization.

Source: Financial Development Report 2012, World Economic Forum
http://www3.weforum.org/docs/WEF_FinancialDevelopmentReport_2012.pdf

 

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In-Country Assessment

Taxation 

FQ 23 What is the level of taxation for small businesses? Are any of those taxes an excessive burden on small businesses? Are any tax discounts provided for small businesses?

Professional Services

FQ 24 What is the experience of small businesses in dealing with professional property market service providers such as real estate agents, brokers and valuers?