On January 12th, 2024, through Resolution No. NAC-DGERCGC24-00000003, the Internal Revenue Service (SRI), issued regulations applicable to the self-retention of Income Tax by corporations qualified as “Large Taxpayers.” A summary of the most relevant points is detailed below:
- CHARGEABLE BASE
The chargeable base for self-retention encompasses all monthly received taxable income, except items related to:
- Service contracts for the exploration and exploitation of hydrocarbons.
- Income derived from contracts with state entities and public companies (central government, decentralized autonomous governments, public companies, decentralized entities, social security entities).
For “Large Taxpayers” receiving income as commission agents, self-retention will be calculated considering only the margin of their commission.
- PERCENTAGES OF SEL-RETENTION BASED ON ECONOMIC ACTIVITY TYPE:
SRI has established self-retention percentages based on the usual economic activity of the called “Large Taxpayers”, according to the following ranges:
ECONOMIC SECTOR | RANKS OF SELF-RETENTION PERCENTAGES |
AGRICULTURE, LIVESTOCK, FORESTRY, AND FISHING | From 1,25% to 5% |
AGROINDUSTRIAL AND EXPORT MANUFACTURING INDUSTRY | From 1,25% to 2,25% |
AUTOMOTIVE | From 1,25% to 4% |
WHOLESALE AND RETAIL TRADE OF GOODS | From 1,25% to 10% |
CONSTRUCTION | From 1,25% to 8% |
MANUFACTURING INDUSTRIES | From 1,25% to 7% |
INFORMATION TECHNOLOGY AND COMMUNICATION | From 1,25% to 10% |
INFORMATION TECHNOLOGY AND COMMUNICATION (MOBILE TELEPHONY) | From 4% to 5% |
DAIRY | From 1,25% to 3% |
NON-RENEWABLE RESOURCES: CEMENT INDUSTRY | From 2,25% to 7% |
NON-RENEWABLE RESOURCES: MINING | 7% |
NON-RENEWABLE RESOURCES: PETROLEUM DOWNSTREAM | From 3% to 8% |
NON-RENEWABLE RESOURCES: PETROLEUM FUEL SALES (SALE OF LIQUEFIED PETROLEUM GAS) | From 2% to 3% |
HEALTH | From 1,25% to 9% |
SERVICES | From 1,25% to 10% |
FINANCIAL SYSTEM (BANKS) | From 4% to 5% |
FINANCIAL SYSTEM (COOPERATIVES) | From 3% to 4,5% |
FINANCIAL SYSTEM (INSURANCE) | From 1,25% to 10% |
Self-retentions will be applied to the monthly taxable income, as a result of which, the corresponding withholding receipt will be issued. In the event that the large taxpayer cis not able to differentiate between taxable and exempt income, this self-retention will be calculated on the total of the monthly received income received.
As well, “Large Taxpayers”, under the regime of the banana, agricultural, or any other specific sector, are exempt from self-retaining Income Tax on their earnings. Consequently, Withholding agents are required to implement the relevant withholding in adherence to the established general regulations.
- DECLARATION AND SELF-RETENTION PAYMENT:
The declaration and payment of the self-retentions mentioned in this resolution will be done in the same way as the procedure implemented for the settlement and payment of withholding taxes on Income Tax and must be submitted on the dates stipulated in articles 102 and 254 of the “Regulations for the Implementation of the Internal Tax Regime” Statute.
The self-retention percentages for companies categorized as “Large Taxpayers” will be effective starting in January of the 2024 tax year.
- REDUCTION OF SELF-RETENTION PERCENTAGE
SRI has the discretion to modify the self-retention percentages at any time, according to the economic circumstances of each sector or when it is anticipated that taxable income may decrease significantly in the current fiscal year, compared to the immediate previous one.
- SANCTIONS:
If a taxpayer fails to withhold or does so partially, they must pay the corresponding amounts with the applicable interest and a penalty of 100% of the withholding, as stipulated in article 21 of the “Tax Code” and in correspondence to article 50 of the “Internal Tax Regime” statute.
© TobarZVS
This publication contains information of general interest and does not constitute legal opinion on specific issues. Any analysis will require legal advice from the Firm.
