Guidance

Doing business in Venezuela: Venezuela trade and export guide

Updated 20 October 2017

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Find out how UK companies can control risks when doing business in Venezuela.

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1. Venezuela export overview

Venezuela is the sixth largest country in Latin America by size and economy. The UK exported £337 million in goods and services to Venezuela in 2015.

Contact a Department for Business and Trade (DBT) Venezuela export adviser for a free consultation if you’re interested in exporting to Venezuela.

Contact UK Export Finance (UKEF) about trade finance and insurance cover for UK companies. You can also check the current UKEF cover position for Venezuela.

Several major UK companies do business in Venezuela including Shell, Diageo, BT, GSK, Astra Zeneca, Aggreko and British American Tobacco.

Benefits for UK businesses exporting to Venezuela include:

• the low import tariffs
• high potential returns due to high margins
• UK reputation for high quality goods and services
• access for UK companies operating in-market into MERCOSUR (site in Spanish) trade bloc

2. Challenges of doing business in Venezuela

Challenges UK companies face which affect doing business in Venezuela include:

• the lack of direct flights from UK to Venezuela
• the government controlled foreign currency exchange which makes it difficult to access foreign currency for imports and remittance of capital and dividends
• price controls
• strongly protective labour regulations
• poor ranking in Transparency International’s Corruption Perceptions Index
• the need to speak Spanish

You should ensure you take the necessary steps to comply with the requirements of the UK Bribery Act.

Read the latest Overseas Business Risk report for Venezuela.

2.1 Exchange controls in Venezuela

In 2003, the Venezuelan government introduced a system to control access to foreign exchange which remains in place, with some modifications in 2015.

The scheme works around allocations of foreign currency to applicants (companies and individuals) according to a list of priorities issued by the local authorities.

There are currently 2 official exchange rates:

1. DIPRO which is a fixed rate of VEF10.00 per USD1 applicable to imports of food staples, medicines and other goods categorised as essential
2. SIMADI/ DICOM which is a managed floating rate of VEF2,640.00 per USD 1 (as of 21 June 2017) applicable to all remaining imports, capital investments in state- defined strategic sectors (oil, gas and mining) with DICOM auctions are taking place at least twice a week as of May 2017

3. Growth potential in Venezuela

Venezuela’s economy has been in recession since 2014. The International Monetary Fund (IMF) has forecast a contraction of 18% in 2016, 7.4% for 2017 and 4.1% for 2018.

There are a variety of reasons for this, including:

• political unrest following the death of Venezuelan President Hugo Chavez in 2013
• continuing difficulties with access to foreign currency via the exchange control system
• government regulation of certain prices
• a significant decrease in the price of oil
• a decrease in consumption and manufacturing

It has resulted in hyperinflation and an increase in the population poverty rate.

The petroleum sector dominates the economy, accounting for over 95% of export goods earnings in 2013.

Since 2006 the Venezuelan government has pursued a policy of assuming state control of strategic sectors in the economy to promote national development. Such sectors include oil, power, metals and mining, and cement, among others.

Foreign companies, including some British-owned businesses, have been affected by this policy, but there are signs of a gradual change. The Venezuelan government has announced the intention to open up opportunities for more foreign participation in the hydrocarbons and mining sectors.

4. UK and Venezuela trade

The UK exported $141.5 million goods to Venezuela in 2016. The main exports were:

• pharmaceuticals
• printed books, newspapers, pictures
• beverages, spirits and vinegar
• distillation products and mineral fuels, including oil
• optical, technical, photographic and medical apparatus

4.1 Top goods and services imports into Venezuela

UN Comtrade ranks Venezuela’s top goods imports as:

1. boilers, machinery
2. electrical and electronic equipment
3. pharmaceuticals
4. iron or steel products
5. cereals
6. plastics and plastic products
7. organic chemicals
8. meat and edible meat offal
9. optical, technical, photographic and medical apparatus
10. live animals

UN Comtrade ranks Venezuela’s top services imports as:

1. transportation
2. personal, cultural, and recreational services
3. travel
4. business services, such as consultancy, technical services and research and development (R&D)
5. insurance services
6. government services
7. communications services
8. royalties and license fees
9. financial services
10. computer and information services

5. Opportunities for UK businesses in Venezuela

DBT provides free international export sales leads from its worldwide network. Find export opportunities in Venezuela.

5.1 Oil and gas sector in Venezuela

Venezuela is one of the world’s largest producers and exporters of crude oil. It has the largest reserves of crude oil in the world and one of the largest natural gas reserves in the Americas.

PDVSA, the state-owned national oil company, is interested in developing Venezuela’s massive offshore gas fields along with other national and international operators.

Venezuela is currently looking to invest in large-scale infrastructure developments. However, these plans may be affected by the decline in global oil prices.

There are opportunities, through joint ventures in Venezuela, for UK companies who can supply:

• high technology goods, such as valves, specialist piping, offshore gas equipment, instrumentation, and flexible pipes
• education and training
• offshore services
• health and safety products
• environmental goods and services

Contact Virginia.Nieto@fco.gov.uk for more information on the oil and gas sector in Venezuela.

5.2 Power sector in Venezuela

CORPOELEC, the state-owned national electricity corporation, has several new thermoelectric plants under construction.

The government aims to increase its installed capacity by investing in the areas of generation, transmission and distribution infrastructure.

Opportunities for UK companies include:

• consultancy services
• transmission and distribution equipment
• niche renewable technology

Contact Virginia.Nieto@fco.gov.uk for more information on the power sector.

5.3 Mining sector in Venezuela

Venezuela, due to its geological structure, is rich in mineral deposits (especially in the south of the country).

The Venezuelan government is looking to strengthen ties with the private mining sector to develop future projects.

Opportunities for UK companies include:

• consultancy services
• education and training
• health and safety products
• environmental goods and services
• specialised machinery for mining purposes

You should seek legal advice on doing business in the Venezuelan mining sector as there are, among others, environmental law restrictions.

Contact Cesar.Hernandez@fco.gov.uk for more information on the mining sector in Venezuela.

5.4 Aid funded business sector in Venezuela

Several development banks and aid agencies fund development projects in Latin America. The DBT can help UK companies win business from these organisations.

There are opportunities for every size of company and sector, but the most needed products and consultancy are in:

• energy
• infrastructure
• financial services
• environment and sustainability
• education and training
• public administration
• industry and trade

Find out more about aid funded business.

Contact Lucia.Lopez@fco.gov.uk for more information on the aid funded business sector in Venezuela.

5.5 Education and training

Many Venezuelan companies and entities in both the private and the public sector are looking to partner with quality education institutions.

The majority of opportunities for UK companies are for training courses in:

• English language
• financial and banking sector
• oil, gas, and mining sector

Other opportunities include:

• high technology services, such as IT programs and tools, and consultancy services
• high technology goods, such as new equipment and related accessories

Contact Cesar.Hernandez@fco.gov.uk for more information on the education sector in Venezuela.

5.6 Food and drink sector in Venezuela

The market is mainly for blended whiskies, but single malts have started to gain recognition among local consumers. The UK also exports bulk whisky to Venezuela for the production of domestic spirit drinks.

Opportunities for UK companies in the food and drink sectors include:

• alcoholic beverages
• packed food products
• specialist food products

Contact Cesar.Hernandez@fco.gov.uk for more information on the food and drink sector in Venezuela.

6. Start-up considerations in Venezuela

There are several ways to approach the Venezuelan market. The most common are:

• appointment of an agent or representative
• working with an importing distributor or retailer
• establishing a branch office
• setting up a joint venture with a local company
• direct sales to customers

7. Legal considerations in Venezuela

Contact the DBT team in Venezuela to help find tax and legal advisers before entering into agreements in Venezuela.

8. Tax and customs considerations in Venezuela

The UK and Venezuela have signed a double taxation agreement.

This agreement should, in most cases, prevent any double tax liability from UK and Venezuelan authorities over the same income.

UK companies operating in Venezuela will be subject to local taxation requirements.

The Venezuelan tax system is split into national and local taxes.

8.1 Value Added Tax (VAT) in Venezuela

VAT (known as IVA in Venezuela) is currently set at 12%. Certain products are subject to different rates. There are also special tax free zones, exempt from paying VAT.

8.2 Other taxes in Venezuela

A range of other taxes apply to businesses, for example:

• social security contributions
• registration taxes
• stamp duty
• municipal taxes

8.3 Customs in Venezuela

The Venezuelan Ministry of Finance is responsible for all customs-related activity through a dedicated agency called SENIAT (site in Spanish).

Venezuela uses the international Harmonized Tariff Code.

Customs tariffs are usually based on the value of the goods. They can vary, but generally range from 5% to 35% (for vehicles). Duties are calculated on Cost, Insurance and Freight (CIF) values. Some products are not subject to any duties (duty free).

The ‘Arancel de Aduanas’ (Venezuelan Customs Tariffs Guide) contains detailed information on each product and its tariff.

The Market Access Database provides information on import conditions into Venezuela, including:

• import tariffs
• customs clearance formalities and documentation
• sanitary (animal related) and phytosanitary (plant related) restrictions

All transactions in foreign currency are regulated with USD the most used currency for transactions.

9. Business behaviour in Venezuela

The official language of Venezuela is Spanish. English is sometimes spoken in business environments.

Contact the DBT team in Venezuela for help to identify a suitable translator or interpreter.

10. Entry requirements for Venezuela

Your passport should be valid for a minimum period of 6 months from the date of entry into Venezuela.

If you are arriving by air, you can enter for up to 90 days on a tourist card (issued on arrival). You must have a valid return ticket.

If you are arriving overland, or by sea, you must get a visa in advance from the Venezuelan Embassy.

10.1 Travel advice for Venezuela

If you’re travelling to Venezuela for business, check the Foreign and Commonwealth Office (FCO) travel advice first.

11. DBT contacts for Venezuela

Contact a local DBT trade adviser in the UK if you are interested in finding out more about doing business in Venezuela.

Contact the Department for Business and Trade (DBT) team in Venezuela for more information and advice on opportunities for doing business in Venezuela.