Venezuela is a country in the Northern portion of South America. It borders the Caribbean Sea and the North Atlantic Ocean, between Colombia and Guyana.
The world’s highest waterfall, Angel Falls, is in this country. The capital city, Caracas, is Venezuela’s primary center of industry, commerce, education, and tourism. The country enjoys an incredible diversity of natural habitats from soaring mountains, jungles, broad river plains and arid coastal plains.
The Economy
From 1958 to the early 21st century the republic was more democratic and politically stable than most other Latin American nations. The republic’s development pattern has been unique among Latin American countries in terms of the speed, sequence, and timing of economic and demographic growth. In the 20th century Venezuela was transformed from a relatively poor agrarian society to a rapidly urbanizing one bolstered by sales of huge petroleum reserves.
The Importance of Small and Medium-sized Companies
Small-, and medium-sized enterprises (SMEs) contribute to the mainstream economy providing vast business opportunities. SMEs are also the breeding ground for larger companies in the future. They contribute significantly to savings and investment and are involved in the development of appropriate technology.
Population Characteristics
Venezuela is a country of about 28.3 million people. During the petroleum boom in Venezuela in the 70’s, many professional and technical workers relocated from Argintina, Chile, and Uruguay. The average age of the people is 28 years and the population boasts a 96% literacy rate.
Economic Opportunities
Venezuela has a mixed economy, which means there are both privately-owned and state-owned businesses.
Venezuela offers U.S. companies excellent offshore talent. Many workers have strong managerial experience and even more are looking for a new opportunity to improve their employment status.
Key Sectors of the National Economy
Petroleum Petroleum exploitation and manufacturing is the largest sector of Venezuela’s economy. Petroleum alone makes up more than 50% of the country’s total Gross Domestic Product (GDP)
Manufacturing The most common products from the manufacturing sector include aluminum, cement, steel, electronics, automobiles, food and drinks.
Agriculture Agriculture is 3% of the economy. Farm and ranching enterprises focus on raising rice, corn, fruit, beef and pork.
Human Talent Venezuela has a young, low-cost, labor pool. In recent years Venezuela’s government has made improving the quality of life of Venezuelan workers a priority with progressive reforms by the working class in wages, social security and workplace conditions. The government has made the employer/employee relationship tip in favor of the employer through a restructuring that relaxes labor relations and wage income. This makes employees more reliant on bonuses.
Prominent Venezuelan Cities for Business
Caracas Businesses in Caracas include banks, service companies, shopping malls, and a largely service-based economy. The city also serves as a hub for communication and transportation infrastructure between the metropolitan area and the rest of the country. Important industries in Caracas include chemicals, textiles, leather, food, iron and wood products.
Maracaibo The main income streams come from oil extraction and refining, growing coffee, maize, rice, cassava, sugarcane and cocoa. Mining enterprises include clay, limestone, coal and sand.
Valencia Valencia is the third-largest city in Venezuela. It’s an economic hub where Venezuela’s top industries and manufacturing companies are located.
Technological Ecosystem
The government has created several programs aimed at improving access to technology for citizens. The government has an interest in promoting technology in the country. There are a growing number of computer centers opening called “infocenters”. They offer residents technology-based services, including computer training and access to the internet.
Facilities for Foreign Investment
Venezuela is open to foreign direct investment (FDI) with a large national market and a wealth of natural resources. Foreign direct investment is a high priority for both economic stability and to tamp down inflation. Other positives include the adoption of production assistance policies to the agri-food industry (coffee, tropical fruits, rice, tobacco, cocoa, alcoholic beverages), as well as to the automobile industry and audiovisual production.
Business Culture in Venezuela
Meeting Etiquette Direct eye contact combined with a firm handshake, and a smile is the standard greeting. When shaking hands, always use the appropriate greeting for the time of day – ‘buenos dias’, ‘buenas tardes’, or ‘buenas noches’.
Gifts Before a dinner party you must send the host flowers, orchids are the best choice. After the gathering, write a handwritten thank you note.
Fact-to-Face Venezuelans prefer in-person meetings rather than doing business by telephone or in writing. It takes time to develop relationships but once formed they’re long-lasting.
Venezuela Gastronomy: regional and traditional cuisines
The Pabellon Criollo is the most traditional dish in Venezuela and it’s usually a lunch. It’s made of white rice, shredded beef, black beans and sweet fried plantains. Arepas is a bread made from cornmeal and can be filled with any kind of cheese, shredded meat, tomato, lettuce and avocado. Bollitos Pelones is a dish of beef meatballs, covered in a cornmeal topping with tomato sauce. They’re usually eaten at dinner.
General Highlights
| Year | 2021 |
| Country | Venezuela |
| Capital | Caracas |
| Num. States/Provinces | 23 states |
| Principal Cities | Caracas, Maracaibo, Valencia |
| Language | Spanish |
| Local Currency | Bolivar |
| Major Religion | Christianity |
| Date Format | dd/mm/yyyy |
| Thousands Separator Format | 999,999,999.99 |
| Country Dial Code | +58 |
| Time Zone | GMT-4 |
| Population | 28,331,060 |
| Border Countries | Colombia, Brazil, Guyana |
| Continental surface | 916.445 km² |
| Fiscal Year | March 31 – December 31 |
| VAT % | 16% |
| Minimum Wage | |
| Taxpayer Identification Number Name in the country | TAX ID |
| Current President | Nicolás Maduro |
What you need to know about employing personnel in Venezuela:Laws and Agencies that regulate labor relationships
| Laws | Brief Description |
| Constitution of Venezuela | The Constitution of the Bolivarian Republic of Venezuela (CRBV) is the twenty-sixth constitution of Venezuela. It was drafted in mid-1999 by a constituent assembly that was created by popular referendum. |
| Venezuelan Labor Law | The labor law deals with critical issues important to all employers running businesses in order to safeguard employees and the Venezuelan economy. |
| Social Security | This covers: – Maternity
– Old age
– Survivorship
– Sickness
– Accidents
– Disability
– Death
– Retirement and unemployment or forced unemployment Social security contributions payable by the employer could amount to 10%, 11% or 12% of salary, with rates varying according to the risk associated with the employee’s work (capped at five minimum salaries). |
Key Tax and Labor Authorities
The Venezuelan Labor Law is called the Organic Law of Labor and workers. This deals with critical issues important to all employers running businesses in order to safeguard employees and the Venezuelan economy.
Labor Contracts
| Probationary Periods | There is no statutory probation period, but employers can use this time to test whether the employee is suited to the role. |
| Contracts Article 23 | Duration of a labor contract:
1. Indeterminate:
Applies when the will of the parties to be bound only for one situation is not expressed.2. Determined:
Concludes upon expiration of the agreed term, which may not exceed one year. If two extensions are made, the contract will be indeterminate.3. Fixed-term contract:
The duration of the contract will be for the entire time required for the execution of the work by the worker. |
| Contractually binding policies and rules | Employers must have policies that they create written in Spanish. Best practice includes notifying employees and then handing them a policy to sign. |
| Work Hours | Limited to eight hours per day, 40 hours per week, which must be worked in a period of five days with two continuous and mandatory rest days per week. Night shifts (between 7 p.m. and 5 a.m.) Shifts are limited to seven hours a day, and 35 hours per week. |
Basic Requirements
Labor Code dictates contracts must contain:
- Work hours
- Overtime
- Wages
- Vacation
- Sick leave & pay
- Maternity / Parental leave & pay
Payroll
Legal Benefits in Venezuela:
| Minimum Wage | 10 |
| Wages | Generally paychecks are distributed monthly and can be in bolivares or USD |
| Overtime | Overtime shall be paid at time and a half of the regular salary |
| Christmas Salary | Mandatory / Paid at year- end |
| Occupational risk insurance | The Superintendencia de la Actividad Aseguradora regulates the Venezuelan insurance industry |
| Vacations or PTO | When the employee completes one year of uninterrupted work, he/she will enjoy a paid vacation period of fifteen working days |
| Maternity/Paternity leave | Pregnant employees are entitled to take six weeks’ leave before giving birth and 20 weeks’ leave after giving birth (Article 336, New OLL) During this period, pregnant employees receive 66.66% of their monthly salary from social security not to exceed five times the minimum salary Employers can also pay employees, and then deduct the payment from the social security bill A father is entitled to paid paternity leave from the social security system of 14 continuous days from the date of birth |
| Carers leave | The New OLL includes leave for care of the spouse, ascendants and descendants up to the first degree of consanguinity, if required and for a time agreed by the employee and employer Carers’ rights are usually contractual and are set out in collective bargaining agreements or internal policies |
| Parental leave | Parents are entitled to one paid day of leave per month when their children are sick, for the first year after their birth (Article 15, Organic Law on Prevention, Conditions and Health Environment at the Workplace Regulations) |
| Foster child leave | A foster mother who adopts a child that is under three years of age has the right to 26 weeks’ maternity leave, from the date of the family placement. The foster mother is also entitled to enjoy indemnification (paid by social security) for her living maintenance and that of her child, and is protected against dismissal for two years from the family placement Foster fathers of children under three years of age are protected from dismissal for up to two years after the family placement (Article 339, New OLL) Foster fathers of children under three years of age can take paid paternity leave for 14 continuous days from the family placement. |
Employers Contribution or Labor Cost applies to the following:
- Maternity
- Old age
- Survivorship
- Sickness
- Accidents
- Disability
- Death
- Retirement and unemployment or forced unemployment
Social security contributions:
Payable by the employer these could amount to 10%, 11% or 12% of salary, with rates varying according to the risk associated with the employee’s work (capped at five minimum salaries). Employers also pay an amount equal to 2% of the salary for the unemployment insurance system (up to ten minimum salaries), and 2% of the salary for each of the housing assistance schemes and the training of the employee.
Furthermore, employers contribute under the Organic Law on Prevention, Working Conditions and Working Environment (LOPCYMAT) at rates varying between 0.75% and 10% depending on the type of work.
Annual Taxable Income
Income of resident individuals expressed in tributary units is subjected to tax at progressive rates. As of June 2021, each TU is valued at VES 20,000.
| Over this amount | Not over this amount | Tax % on Excess |
| 0 units | 1,000 units | 6% |
| 1,001 | 1,500 units | 9% |
| 1,501 | 2,000 units | 12% |
| 2,001 | 2,500 units | 16% |
| 2,501 | 3,000 units | 20% |
| 3,001 | 4,000 units | 24% |
| 4,001 | 6,000 units | 29% |
| Over 6,000 units | | 34% |
Corporate Tax Rates
Income Tax Law reform established the concept of a taxable unit (TU).
The tax code established the initial TU at 1 bolívar fuerte (VEF), with annual basis adjustments according to the variation on the Consumer Price Index (CPI) from the previous year. For 2021, the TU published value is VES 20,000.
| Taxable Gross Income | Tax Rate |
| 0-2,000 units | 15% |
| 2,000-3,000 units | 22% |
| 3,000 and up | 34% |
Disability
Organic Law on Prevention, Working Conditions and Environment of July 25, 2005 helps to monitor things such as disability needs. Employers contribute under the Organic Law on Prevention, Working Conditions and Working Environment (LOPCYMAT) at rates varying between 0.75% and 10% depending on the type of work.
Public Holidays
The Labor Code provides for public holidays that are observed in Venezuela:| Date | Holiday Name |
| 1 January | New Year’s Day |
| 15 & 16 February | Carnival |
| Thursday before Easter | Maunday Thursday |
| Friday before Easter | Good Friday |
| 19 April | Declaration of Independence |
| 1 May | Labor Day |
| 24 June | Battle of Carabobo |
| 5 July | Independence Day |
| 24 July | Simon Bolivar Day |
| 12 October | Day of Indigenous Resistance |
| 24 December | Christmas Eve |
| 25 December | Christmas Day |
| 31 December | New Year’s Eve |
Termination
| Type of Termination | Brief Description |
| Justified Dismissal | No severance pay in case of dismissal with just cause, which corresponds to employee’s misconduct (article 79 OLLW). Employee’s capacity is not a just cause for dismissal |
| Unjustified Dismissal | Under an immunity decree it’s not possible for an employer to terminate an employee’s employment for unjustified cause for workers with less than one month tenure, employees in managerial positions and seasonal and occasional workers. Workers unjustifiably dismissed have the right to request their reinstatement and also a seniority indemnity equivalent to 30 days’ wages per year of service or fraction exceeding six months, up to a maximum of one hundred and fifty days’ wages |
| Voluntary Resignation | When an employee resigns for reasons not attributable to the employer there is no severance payment, but there is a payment of outstanding benefits. The employee must give prior notice to the employer of his resignation |
Other forms of compensation upon termination include:| Length of Employment | Severance Amount |
| Per years of service (and/or fraction of 6 months of service) | 30 days’ wages per year of service |
