Venezuela Market Entry

Venezuela Market Entry

Subchapters:

  • Market entry
  • Forms and conditions of operation on the market
  • Marketing and Communications
  • Issues of intellectual property protection
  • Public procurement market
  • Payment terms, payment ethics and resolution of commercial disputes
  • Visas, fees, specific conditions of travel to the territory
  • Employment of citizens from the Czech Republic
  • Fairs and events

Market entry

Trade with Venezuela is currently restricted by multiple US sanctions regimes. Sanctions from the European Union are primarily aimed at individual representatives of the regime and then at the area of ​​arms trade and special weapons in general. More detailed specifications of export restrictions can be found, for example, on the EUR-Lex website. Check smber for agriculture and fishing facts of Venezuela.

Distribution and sales channels, use of local representatives, other factors affecting sales

The sale of Czech products on the Venezuelan market is significantly influenced by the current political and economic situation and the country’s foreign exchange policy (political and legal uncertainty and the resulting economic consequences, lengthy and complicated handling of import permits, certification and licensing of imports, bureaucracy in foreign trade operations and handling of shipments and.). The options for choosing distribution channels are not limited, all forms are possible from sales representatives to direct sales to the end user.

Venezuelan companies do not welcome demands from foreign suppliers for minimum annual purchases or minimum annual sales. It is recommended to conclude all agreements and contracts in writing, for investment goods with a lien – reserva de dominio.

Import conditions and documents, customs system, export control, domestic market protection

There is no need for a special authorization to operate a commercial activity during importation, apart from the mandatory registration with the financial office SENIAT, which also administers customs, in the case of import activity in some areas, registration with the Office for Standardization, Quality and Measures SENCAMER is also required. A relatively important factor is the habit of Venezuelan companies to purchase goods directly from the manufacturer, instead of using local intermediaries. It is advisable to use the services of sales representatives for simple products with minimal requirements for after-sales services. The representative charges a usual commission for closing the deal, the amount of which varies between 5-25%, depending on the nature of the goods and services and also the time needed to secure the deal. Low commission percentages are usually paid for large volume deliveries of investment goods, higher percentages for piece goods,

Trade with Venezuela is complicated by numerous administrative obstacles. Exports from Venezuela are carried out by registered export companies or directly by the national manufacturer. In the payment system, the recommended form is an irrevocable documentary letter of credit. Import licenses for weapons are issued by the Dirección Nacional de Armas y Explosivos, Ministerio de Defensa and Ministerio de Relaciones Interiores. Documents required when importing to Venezuela:

  • Customs declaration (information on the origin of goods, weight, value)
  • Invoice
  • Shipping documents
  • According to the type of goods, the relevant certificate of quality
  • sanitary (food, drinks, medicines, cosmetics)
  • phytosanitary (plant products)
  • Import license if prescribed

As the processing of customs documents can be complicated with regard to local conditions, it is advisable to ensure this process through specialized companies (so-called consignatarios). The domestic market is protected by high tariffs in areas that are developed in the country. On the contrary, there are zero customs rates in areas that are not able to be covered by domestic production.

Venezuela divides the customs administration between the so-called customs administration (operational level) and central administration (regulation level). The operational level, which consists of seventeen main customs offices with relevant subordinate offices, is responsible for carrying out the perceptual inspection of goods subject to declaration as well as their physical verification and for matters related to the disposal and payment of tax and its subsequent collection. The regulatory level is made up of the national customs administration, the governing unit on which the administration of tariffs, the administration of customs regimes, the administration of values ​​and the administration of customs controls depend. The umbrella body is SENIAT.

Forms and conditions of operation on the market

Companies that intend to enter the Venezuelan market cannot do without the services of a local legal or other specialized firm that thoroughly knows the domestic environment and is able to provide basic information on issues of labor law, tax laws, real estate acquisition, conclusion of a contract with a sales representative, right up to the purchase contracts for goods and services. Venezuelan laws are not simple, regulated areas are not only regulated in laws, but also in many presidential decrees and other sources. It is therefore advisable to make maximum use of the knowledge and experience of local specialized companies. Registration with CENCOEX (Centro Nacional de Comercio Exterior) is a basic condition for establishing a joint venture or purchasing a share (max. 49% can be owned) in an existing company.

Registration is also required for licenses. Joint ventures and branches of the parent company have the same status as Venezuelan companies. Shares are conditional on a majority for the Venezuelan side, i.e. min. 51%. The limitation of shares also applies to non-commercial businesses (lawyers, architects, healthcare services – these professions fall under the Act on Professions). The business must first be registered with the Venezuelan Commercial Register (Registro Mercantil SAREN ) by submitting a registration application. The articles of association of the company must be drawn up, stating the name and address of the company, the object of business, the amount of the share capital and the name and address of the owner of the company. After registration, it is necessary to apply for the allocation of an income tax payer registration number (so-called RIF and NIT) at the Ministry of Finance – Tax and Customs Office SENIATu. The company collects the accounting books from the commercial register and opens a bank account. For companies whose business is subject to special laws, registration with other institutions is also required, banking falls under the banking supervision and control of SUDEBAN(Superintendencia Bancaria), insurance companies register with the Superintendencía de Seguros, companies operating in the petrochemical industry require registration with the Ministry of Energy and Petroleum, and tourism companies with Corpoturismo, etc. When a branch is established by a foreign investor, a copy of the decision of the company’s board of directors is required for registration branches, details of capital, articles of association and specific laws in force in the company’s country of origin. All these documents must be translated by an authorized translator and officially certified. However, legal certainty of ownership is not guaranteed.

Marketing and communication

All forms of promotion in mass media and advertising are available, but they are financially demanding. All forms of marketing are used in the country (raffle contests, system of discounts and sales events, etc.). Unfortunately, most mass media are either owned or controlled by the regime, and advertising in these media can be counterproductive for some customers. Advertising agencies or offices dedicated to promotion rapidly decreased and in some parts of the country disappeared completely.

Issues of intellectual property protection

Venezuela has extensive legislation to protect intellectual property rights, especially copyright and industrial property rights, but their application in practice is problematic.

The laws and international agreements that govern the areas of intellectual property protection are enshrined in the following legislation:

  • Decision No. 344 on Industrial Property of the Cartagena Agreement (1993)
  • Resolution on Decision No. 313 of this Cartagena Agreement
  • Decision No. 345 of the Cartagena Agreement on a Common Regime for the Protection of Plant Species Rights (1993)
  • Decision No. 351 of the Cartagena Agreement on a Common Copyright Regime
  • Industrial Property Act (1955) – Under revision
  • Copyright Act (1993)
  • Agreement on Trade-Related Aspects of Intellectual Property Rights (ADPIC) OMC
  • Paris Agreement on the Protection of Industrial Property
  • Berne Agreement for the Protection of Literary Works
  • Universal Copyright Agreement
  • Geneva Agreement on Phonograms etc.

In terms of these laws and legal decisions, patent protection is established for 20 years and the criterion of brand protection is used. It is possible to patent pharmaceutical and food products, beverages, biotechnological processes, animal species, plant species, etc. The management of these property rights is regulated by the autonomous industrial property registration service – SARPI (Servicio Autónomo de Registro de la Propiedad Industrial) at the Ministry of Industry and Trade.

Patents and inventions cover the following segments:

  • Technology area – utility models, industrial designs, industrial secrets
  • Areas of trade – trademarks, trade names, commercial logos, description of origin.

Public procurement market

The Law on Tenders (Ley de Licitaciones) is in force in the country, which allows both national and international companies to participate in public tenders. The results of the competition and subsequent contracting must be notified to the National Contracting Service (Servicio Nacional de Contrataciones) established by the Ministry of Trade. However, one of the main problems, according to a Transparency International (TI) report, is the significant number of exceptions to this law that allow direct purchases. According to TI, approximately 95% of all contracts are realized through direct purchases, while only 5% through bankruptcy. It is not expected that there will be any constructive interventions from the government in the future. National or international public tenders may be issued for public contracts, depending on the sector of the national economy for which they are intended.

Payment terms, payment ethics and resolution of commercial disputes

To resolve commercial disputes in Venezuela, it is mandatory to use the services of local law firms for further arbitration or court proceedings. It is possible to settle the dispute by way of conciliation.

The generally unfavorable situation in the political and economic spheres in Venezuela is logically reflected in the social sphere as well, including the personal expressions of Venezuelan citizens and business partners. There is a noticeable shift in their approach to business partners, above all the previously not very typical prudence when making new contacts, an unprecedentedly high level of mistrust and caution. In some cases, the consequences of certain bullying can be manifested, which reduces the solvency of the Venezuelan company, most often in the case of sudden withdrawal of import licenses or non-allocation of foreign exchange funds for imports.

Investments in Venezuela are a big risk, as well as ensuring their return, repatriation of profits, dividends, etc., due to the ever-increasing shortage of foreign exchange. The government enforces a policy of importing technologies that must remain in the country. This results in the risks of securing payments for such supplies. Both exports and imports are subject to discriminatory administrative barriers. There is no free sale and movement of foreign exchange and any business transactions are risky and non-standard. In the payment system, it is most advantageous, where individual business cases allow, to request payment in advance. However, the usual and most used form is a documentary letter of credit. A higher form of payment security is recommended, namely an irrevocable and confirmed letter of credit.

Visas, fees, specific conditions for traveling to the territory

Visa, entry regime, registration requirement:

The Czech Republic was included in the list of countries whose citizens do not need a tourist visa to enter the country. Entry is permitted on the basis of a passport valid for at least another 6 months. During the stay in the country, the tourist cannot perform a gainful activity and can be in the territory of Venezuela for a maximum of 90 days.

A visa is required for other types of stay:

the so-called Simple Transeúnt e – entry for a purpose other than tourism. Includes:

  • Transeúnte de negocios (TR-N) – entry for business purposes, which must be documented, stay up to 180 days for a single entry, up to 90 days in case of multiple;
  • Transeúnte inversionista (TR-I) – for foreign investors registered in Venezuela with the SIEX office (supervision of foreign investments), validity 3 years, multiple entry;
  • Transeúnte empresario industrial (TR-EI) – for entrepreneurs whose foreign company has a branch in Venezuela, the visa is multiple with a validity of 2 years;
  • Transeúnte familiar venezolano (TR-FV) – for the entry of relatives of Venezuelan citizens (spouses – the wedding took place abroad) in order to further legalize their stay in Venezuela;
  • Transeúnte rentista (TR-RE) – for foreign retirees who spend part of the year in Venezuela (must prove a monthly income of 1,200 USD and 500 USD for each other person in the same household, the visa is for 1 year of stay (extendable), multiple);
  • Transeúnte empleado doméstico (TR-ED) – only for domestic employees of Venezuelan diplomats;
  • Transeúnte estudiante (TR-E) – for entry for study purposes (must be documented), the visa is for 1 year of stay with the possibility of extension to the foreign police (DEX), multiple; • Transeúnte religioso (TR-REL) – to enter for religious (e.g. pilgrimage) purposes, it is necessary to have the authorization of the Ministry of the Interior and Justice for the activities of the relevant church or sect, the visa is valid for 1 year, multiple;
  • Transeúnte reingreso (TR-RI) – for the return of foreigners who left the country during the residence procedure (when returning on a tourist visa, these persons would lose the accumulated time without leaving the country prescribed for the grant of residence), validity is 6 months, only for 1 entry + re-entry of Covid-19
  • Transeúnte laboral (TR-L) – not issued by the consulate, it requires the authorization of the foreign police DEX, it is granted to persons for the purpose of employment in Venezuela (it is necessary to prove that the person is a specialist who is not available in the country to protect the local labor market against cheap forces from abroad); does not apply to international artists;
  • Transeúnte familiar (TR-F) – for relatives of holders of one of the other Transeúnte visas, a visa with the same characteristics is granted;

Transeúnte visa holders may be issued a local identification card (Cédula de Identidad) by the ONI-DEX (Foreign Police and Citizen Identification) Office of the Ministry of the Interior and Justice. Without this card, foreigners cannot open bank accounts in the country, which are absolutely essential when starting a business in Venezuela.

Visa de cortesía – refers to artists to participate in an event of an international nature, the General Directorate of Consular Affairs of the local Ministry of Foreign Affairs authorizes the consulate to issue this visa. Temporary visas (business, student, work, accompanying) are issued by the Dirección de Extranjería DEX of the Ministry of the Interior. They must be requested in the department corresponding to the type of visa at: Ministerio de Relaciones Interiores, Dirección General Sectorial de Extranjería, Edificio ONI-DEX. A response can be expected in approx. 15 working days.

Foreigners are not required to register on the territory of Venezuela.

The import of non-commercial goods for personal consumption is exempt from customs duties. Venezuelan embassies abroad sometimes require proof of the applicant’s solvency when applying for a visa. The requirement to prove the provision of financial means for a stay in Venezuela is included in the requirements for visa applications and is demonstrated in the form of a bank reference. For security reasons and due to currency restrictions, it is not recommended to bring large amounts of cash. If there are no power outages, which are very frequent and long-term, it is possible to pay by card. Considering the four-digit inflation rates, it is usually not even possible to pay for the purchase in cash, because a large amount of local currency is neither available nor realistic to carry with you. Therefore, payment in dollars is common, but often the seller does not have or does not want to return the “change”. As a result, goods very often become considerably more expensive. Many shops don’t even accept the local currency (VEF) anymore. It tolerates the mode of payment in dollars, but does not regulate it in any way.

Tolls are only collected in some federal states. Hotel rates are paid in local currency. For one night in safe hotels, prices can range from 200 to 400 USD (depending on the exchange rate), but hotels should not accept foreign currency, but this may change recently. Cheap accommodation facilities are not a guarantee of safety.

It is not possible to travel with only a copy of the document. Foreigners must have a valid passport with them at all times. No photocopies of documents are accepted by local police or other authorities.

The country has a high level of crime, the severity and intensity of which continues to grow. In addition to frequent petty thefts, armed robberies, kidnappings and murders are on the rise, even during the day. In the event of a robbery or other disability, you must first contact the police and write a report. During your stay in Caracas, it is strictly not recommended to walk around the city after dark. It is not advisable to visit the marginal neighborhoods of Caracas, the so-called “ranchitos”, which are not even monitored by the local police. Due to the poor security situation on the border between Venezuela and Colombia, it is not recommended to travel to the Venezuelan border regions of Zulia, Táchira, Amazonas and especially Apure.

Season: dry season – November to April; rainy season – May to October. However, with climate change, the seasons are not always this regular.

Employment of citizens from the Czech Republic

In Venezuela, there is no ban on employing foreigners, but according to the law, the ratio of one foreign worker to 10 local employees must be observed. The employment relationship is regulated by the Labor Code, which sets out all the rights and obligations of workers in relation to the employer and is very complicated in terms of freedom of interpretation. When concluding an employment relationship, it is recommended to use the services of law firms specializing in employment law. Foreigners have the same employment rights as local employees. The minimum wage is increased annually by the regime, however, in the state sector, it currently stands at USD 2 per month in local currency.

Healthcare for Czech and EU citizens at an adequate level is provided by private facilities and must be paid for in advance. However, private facilities are decreasing. If an injured or sick person does not have cash in dollars or a valid international credit card with him, he is not treated even in the event of a life-threatening situation. The state healthcare system has been at a low level for a long time, and due to the departure of qualified doctors, the acute shortage of medicines or the several-month wait for free treatment, Czech citizens are clearly recommended to turn to the private sector. However, due to the deep political and economic crisis, it is also facing a lack of material and personnel. Thousands of Cuban doctors work in the state health sector (according to government data), but they often have not completed more than three years of study.

The pandemic situation further deepened the health crisis and several hundred health workers paid for it with their lives. Also, the equipping of state facilities with hygienic means is very bad with regard to the lack of funding in the health sector and the fact that little humanitarian aid (the regime does not allow a large amount of international aid into the country) is often dismantled by regime representatives or army representatives.

Fairs and events

Venezuela is not a country with a tradition of international and national fairs and exhibitions, only some rare specialized industry exhibitions are organized on a regional scale.

The most important can be considered:

  • May: Día de Comercio (National Congress of Merchants)
  • June: Día de Industrias (National Business Congress)
  • September: Valencia International Industrial Fair, Puerto Ordaz International Fair
  • October: International Tourism Fair.

There are currently no events taking place due to the measures taken due to the COVID19 pandemic, and it is not clear which of the regularly held ones will be resumed.

 

Practical telephone numbers (emergency services, police, firemen, information lines, etc.)

  • Emergency: 911
  • Movistar *1
  • Movilnet *911
  • Digitel *112
  • Emergencias Bolívar 171; (0286) 713-0279

POLICE:

  • Metropolitana 564-3786; 862-5871 862-5872
  • Gunpowder 943-2855
  • Chacao 264-1784
  • Sucre 242-2111; 2211; 5920
  • CICPC 508-4210; 4204
  • Cuerpo Técnico de Policía Judicial 571-3533; 3844; 3266
  • PoliMiranda 364-3471
  • PoliSur (Mcpo. San Francisco, Zulia) (0261) 731-4777

Ambulance and paramedic s:

  • Servicio Ambulances Metropolitano 545-4545; 545-4655
  • Ambulances Silva 953-4822
  • DEL ESTE phone: +58-212-265 02 51, 267 65 29, 265 07 50
  • AIR AMBULANCE tel.: 0058-212-993 25 41
  • Socorristas Cruz Roja 571-4713
  • Cuerpo de emergencies, rescate y transmissions 545-4747
  • Protección Civil 0-800-558842; 631-8602; 631-9058

Firefighter s:

  • BOMBEROS CARACAS DF phone: 911
  • Metropolitanos 545-7765 ; 545-8053; 545-0331; 545-4545; 542-2321; 577-9209; 542-0066; 542-2512
  • Aeronáuticos – La Carlota 993-2973; 2580
  • Aeronáuticos – Maiquetía 303-1405; 1306; 1407
  • Aeronáuticos – La Chinita (0261) 735-1045
  • Maritimos 332-2165

Important web links and contacts

Office of the Vice President http://vicepresidencia.gob.ve/

National Assembly http://www.asambleanacional.gob.ve/ https://www.asambleanacionalvenezuela.org/

Banco Central de Venezuela http://www.bcv.org.ve/

Ministry of Economy and Finance http://www.mppef.gob.ve/

Ministry of Petroleum http://www.minpet.gob.ve/index.php/es-es/

Ministry of Industry http://www.mppi.gob.ve

Financial and Customs Office http://declaraciones.seniat.gob.ve/portal/page/portal/PORTAL_SENIAT

Federation of Chambers of Commerce https://www.fedecamaras.org.ve/

National Center of External Trade http://www.cencoex.gob.ve/usuarios-registrados

Venezuelan Confederation of Industry https://www.conindustria.org/

State Oil Companies (linked to the Ministry of Oil) http://www.pdvsa.com/index.php?lang=es

Venezuela Market Entry