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Venezuela is a peculiar country. It is bizarre, especially socially. Its culture, although at times difficult to adapt to, is a rich and diverse one. Because of the deeply rooted Communistic tendencies of the people, compassion, as it seems in other countries, tends not to be considered a virtue. Besides, the “Venezuelan Way” of dealing with people is very straightforward. Though this can be refreshing at times, it can also be offensive, especially when approaching the business world. As in most other countries, doing business in Venezuela goes through a process of forming relationships, which vary according to the social groups involved. The most advantageous social standing in Venezuela is achieved by those who are the most “affluent,” the “contacts,” the “generous.” But generosity does not imply donating funds to charities or qualifying for a tax exception, as in the States. Generosity in Venezuela is a spectacular show of money and self-pride, that is, showing off.
In addition, although the culture is very communal, the social class levels are quite stratified, and you must be navigated through this social maze in order to make sound business decisions. Business Etiquette in Venezuela is very important. A Venezuelan business etiquette guide would be next to useless in that respect.
A sample of Venezuelan business etiquette would be as follows: First you must identify your potential customer’s social status. Then you must decide how much money you think you can twist out of him in order to finance your ideas and objectives. Then, you will address him under special circumstances, which will vary depending on his social standing, your medium of communication, et cetera. For instance, if this potential customer’s resources are based on the public sector, you must shower him with praises so that he will consider himself very generous to invite you to his mansion, or his restaurant, for lunch.
Business etiquette in Venezuela requires a special strategy, because the high-class clientele is very harsh on anyone who does not wave money under their noses, just as they do.
The Venezuelan business etiquette is efficient, yet delicate. When approaching the business world, you must make sure to win over your audience at first sight, because it is very likely that you will have to make friends with any and all the influential people in the area. If not, you might end up in the unemployment line. A secure job market requires that you approach your business dealings with an open mind, as well as proper manners and shrewdness. You have to treat everyone with dignity and respect, not only when they are your “friends.” Patience is also part of the Venezuelan business etiquette package. The frequent blunders in business that are committed by Venezuelans of the capital are due to a lack of time, as well as a shortage of planning. Such differences in Venezuela make the rules of doing business difficult to grasp. But once a person familiarizes herself with these rules, she will be well on her way to becoming a successful businesswoman.
Venezuelan Law and Customs
A general summary of Venezuelan law and customs is presented in the following excerpts:
Venezuela is a federal republic. Its laws are based on the principles of separation of powers. The President is the Chief of State, but he is not the head of the government. This office is held by the Executive, who is elected by popular vote. His office is selected by the National Council of the Venezuelan Congress, which is headed by the President of the Republic, and it is assisted by an Attorney General.
Venezuela maintains a strict criminal system in which the application of sentences is very severe, particularly for drug offenses.
The Supreme Court makes the final decision in most legal quarrels, since the judicial system is divided into three levels. While the lower courts deliver the sentences for minor offenses, the courts of appeal have jurisdiction over those cases of a higher degree. This is because the Venezuelan legislature passed a law in 1998 prohibiting the Supreme Court from hearing the appeals against its rulings. The Supreme Court deliberates a matter only if the sentence pronounced by the lower court is less than six years. The Supreme Court is also the most important court for the definition of the general principles of law.
The Constitution of Venezuela establishes that the official and indigenous languages are the Spanish and the Guarani.
The Republic of Venezuela is divided into twenty-five states, each one of them being governed by the Attorney General appointed by the President of the Republic.
In Venezuela, as in most of the Americas, divorce is not permitted. The most common reason for marital break down is the separation of the couple.
Property rights in Venezuela are highly established, because of the easiness for the foreigner or the tourist to protect his rights by way of either the proper authorities or by the public courts. If a land dispute occurs between a foreigner and a Venezuelan citizen, it can be referred to the International Court of Justice at The Hague.
Personal freedom is guaranteed by the Constitution, which recognizes the right of the citizens to freedom of movement and association.
The right of an individual to express his ideas or his thoughts is also guaranteed by the Constitution, as well as the right to privacy, which means living without the bother of outside interference.
In Venezuela there is no requirement for an official marriage. Only a registered contract is required if neither partner has been married before. Cohabitation is regarded as a contract, and it is automatically dissolved by divorce or death.
In Venezuela, politicians are governed by an ethical code that falls short of any kind of law, which leaves the members of the press free to express their own opinions or to criticize the government and its officials.
In Venezuela, a woman has the right to make decisions over her body and carry out the termination of her pregnancy over privacy issues, just as in the US. A fourteen-year-old teenager may apply for an abortion without her parents’ permission.
Venezuela practices the death penalty in very rare cases. The last execution took place in the year 1989.
The death penalty is practiced in Venezuela when the indictment is premeditated murder, or when the indicted person is a recidivist.
For narcotics trafficking, if the group of persons who are found guilty of the crime consists of one individual, he receives a mandatory sentence of five to twenty-five years in prison. If the group of persons who are found guilty of the crime consists of two to four persons, the mandatory sentence that they receive is eight to fifty years in prison. If the group of persons who are found guilty of the crime consists of five or more persons, they receive a mandatory sentence of twelve to fifty years in prison.
The president of Venezuela, the only authority that will determine if the sentence will be served in Venezuela, has the option to hand down the death penalty or acquit the accused.
Venezuela maintains a free-market economic system. There are no government-imposed limitations to set prices on various commodities. The government’s policy is to control the commercialization of those products that have public health implications.
The Venezuela currency is the Bolivar.
Venezuela is considered to be a dangerous country for tourists. The country is absolutely dangerous because of the growing overcrowding of the prison system. The country is deemed safe for teachers and students, but very unsafe for tourists because of common crimes and heavy drug trafficking. Some areas of Venezuela are safer for tourists than others; the Andean mountain belt and the Caribbean coast, particularly the islands, are safer than cities and towns on the mainland. Then, there are rates of murders or murders per one-hundred-thousand citizens in Venezuela: 18.4, and it is ranked fifth in the most dangerous places in the world.
The delinquency and homicide rates in Venezuela have skyrocketed in the past ten years, due to the fact that the government has not been able to solve the deep-rooted social problems of drugs, and a variety of other factors.
Venezuelan Tax System
Venezuelan businesses must still pay the old corporate income tax, which covers the country’s operational procedures. It is calculated based on the total net income, after being deducted by expenses, debts, and issues. This tax has a combined rate of 33 percent for both types of tax.
The other types of taxes that businesses are required to pay are the income tax and the capital gains tax. The Venezuelan income tax rate is 24 percent for both individuals and businesses. The Venezuelan government has legislated to aid taxpayers by allowing them to hire accountants to complete different accounting services, such as depreciation, rent and lease, and patent expenses, so that businesses do not have to worry about these expenses.
Venezuelan businesses also have to pay the capital gains tax. This tax is based on the capital invested, rather than on the income. For example, if an individual were to sell his property for 1,000,000 Bolivars, the capital gains tax would have to be paid based on the total gain that the individual received. This is calculated based on the total invested capital, which is his total investment, or in the case of the example, he would pay capital gains tax based on 1,000,000 Bolivars. If the same individual was to invest 100,000 Bolivars in the purchase of a certain stock, he would pay 10 percent of that amount for the capital gains tax, or 10,000 Bolivars.
The Venezuelan government has created the Carrot Code, which is a program that aims to match real estate taxes to the income of the owner of the property. The Carrot Code is a type of formula that takes into account the accumulated net profit of the taxpayer, of course, interest on the amount that was invested, financial expenses, and the real estate value of each unit, and it calculates each one of these values on an annual basis. Taxpayers can opt for one of the following three options: full taxation, a minimum taxation, or the option to pay a percentage between the two. The more an individual invests, the more tax incentives the individual will receive.
The Venezuelan government has created a tax-incentive system for investors and retirees. Tax incentives include the exemption of information fees, property transfer fees, and income tax for individuals; and for corporations, the exemption of employee income taxes and information fees.