Doing Business 2018 Venezuela, RB Economy Pro le of Venezuela Doing Business 2018 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction Procedures, time and cost to complete all formalities to build a warehouse and the quality control and permits safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time and total tax rate for a firm to comply with all tax regulations as well as post-filing processes Trading across borders Time and cost to export the product of comparative advantage and import auto parts Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency Labor market regulation Flexibility in employment regulation and aspects of job quality About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local rms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of labor market regulation. Although Doing Business does not present rankings of economies on the labor market regulation indicators or include the topic in the aggregate distance to frontier score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more e cient regulation; o ers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business o ers detailed subnational reports, which exhaustively cover business regulation and reform in di erent cities and regions within a nation. These reports provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The rst Doing Business report, published in 2003, covered 5 indicator sets and 133 economies. This year’s report covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business, also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has bene ted from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. Page 2   for insolvency Doing Business Labor market 2018 regulation FlexibilityRB Venezuela, in employment regulation and aspects of job quality About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local rms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of labor market regulation. Although Doing Business does not present rankings of economies on the labor market regulation indicators or include the topic in the aggregate distance to frontier score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more e cient regulation; o ers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business o ers detailed subnational reports, which exhaustively cover business regulation and reform in di erent cities and regions within a nation. These reports provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The rst Doing Business report, published in 2003, covered 5 indicator sets and 133 economies. This year’s report covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business, also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has bene ted from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. The distance to frontier (DTF) measure shows the distance of each economy to the “frontier,” which represents the best performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s distance to frontier is re ected on a scale from 0 to 100, where 0 represents the lowest performance and 100 represents the frontier. The ease of doing business ranking ranges from 1 to 190. The ranking of 190 economies is determined by sorting the aggregate distance to frontier scores, rounded to two decimals. More about Doing Business (PDF, 5MB) Ease of Doing Business in Latin America & DB 2018 Rank Region 190 1 Caribbean Venezuela, RB Income Category Upper middle income 188 DB 2018 Distance to Frontier (DTF) Population 31,568,179 0 100 GNI Per Capita (US$) 9,258 30.87 City Covered Caracas DB 2018 Distance to Frontier (DTF) 0 100 72.27: Mexico (Rank: 49) 58.66: Regional Average (Latin America & Caribbean) 58.11: Argentina (Rank: 117) 56.45: Brazil (Rank: 125) 50.18: Bolivia (Rank: 152) Page 3   aggregate distance to frontier scores, rounded to two decimals. More Doingabout 2018 (PDF, Doing Business Business 5MB) Venezuela, RB Ease of Doing Business in Latin America & DB 2018 Rank Region 190 1 Caribbean Venezuela, RB Income Category Upper middle income 188 DB 2018 Distance to Frontier (DTF) Population 31,568,179 0 100 GNI Per Capita (US$) 9,258 30.87 City Covered Caracas DB 2018 Distance to Frontier (DTF) 0 100 72.27: Mexico (Rank: 49) 58.66: Regional Average (Latin America & Caribbean) 58.11: Argentina (Rank: 117) 56.45: Brazil (Rank: 125) 50.18: Bolivia (Rank: 152) 30.87: Venezuela, RB (Rank: 188) Note: The distance to frontier (DTF) measure shows the distance of each economy to the “frontier,” which represents the best performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s distance to frontier is re ected on a scale from 0 to 100, where 0 represents the lowest performance and 100 represents the frontier. The ease of doing business ranking ranges from 1 to 190. Rankings on Doing Business topics - Venezuela 1 28 55 82 Rank 109 122 135 136 143 147 165 163 177 186 189 187 190 190 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Distance to Frontier (DTF) on Doing Business topics - Venezuela 100 80 59.27 60 DTF 52.29 46.89 40.00 40 25.00 26.67 16.85 18.66 20 15.18 7.93 0 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Change:0.00 Change:-0.07 Change:0.00 Investors Change:+0.18 Borders Change:0.00 Change:-0.14 Change:-7.94 Permits Change:0.00 Change:0.00 Change:+0.07 Starting a Business Page 4   a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Change:0.00 Change:-0.07 Change:0.00 Investors Change:+0.18 Borders Change:0.00 Change:-0.14 Change:-7.94 Permits Change:0.00 Change:0.00 Doing Business 2018 Venezuela, RB Change:+0.07 Starting a Business This topic measures the paid-in minimum capital requirement, number of procedures, time and cost for a small- to medium-sized limited liability company to start up and formally operate in economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The distance to frontier score for each indicator is the average of the scores obtained for each of the component indicators. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and operate a To make the data comparable across economies, several assumptions company (number) about the business and the procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay Pre-registration (for example, name verification no bribes. or reservation, notarization) Registration in economy’s largest business city The business: - Is a limited liability company (or its legal equivalent). If there is more than Post-registration (for example, social security one type of limited liability company in the economy, the most common registration, company seal) among domestic rms is chosen. Information on the most common form is Obtaining approval from spouse to start business obtained from incorporation lawyers or the statistical o ce. or leave home to register company - Operates in the economy’s largest business city and the entire o ce Obtaining any gender-specific permission that space is approximately 929 square meters (10,000 square feet). For 11 can impact company registration, company economies the data are also collected for the second largest business city. operations and process of getting national - Is 100% domestically owned and has ve owners, none of whom is a legal identity card entity; and has a start-up capital of 10 times income per capita and has a Time required to complete each procedure turnover of at least 100 times income per capita. (calendar days) - Performs general industrial or commercial activities, such as the production or sale of goods or services to the public. The business does Does not include time spent gathering not perform foreign trade activities and does not handle products subject information to a special tax regime, for example, liquor or tobacco. It does not use Each procedure starts on a separate day (2 heavily polluting production processes. procedures cannot start on the same day) - Leases the commercial plant or o ces and is not a proprietor of real Procedures fully completed online are recorded estate and the amount of the annual lease for the o ce space is equivalent as ½ day to 1 times income per capita. Procedure is considered completed once final - Does not qualify for investment incentives or any special bene ts. document is received - Has at least 10 and up to 50 employees one month after the commencement of operations, all of whom are domestic nationals. No prior contact with officials - Has a company deed 10 pages long. Cost required to complete each procedure (% of The owners: income per capita) - Have reached the legal age of majority. If there is no legal age of majority, Official costs only, no bribes they are assumed to be 30 years old. No professional fees unless services required by - Are sane, competent, in good health and have no criminal record. law or commonly used in practice - Are married and the marriage is monogamous and registered with the authorities. Paid-in minimum capital (% of income per capita) - Where the answer di ers according to the legal system applicable to the Funds deposited in a bank or with third party woman or man in question (as may be the case in economies where there before registration or up to 3 months after is legal plurality), the answer used will be the one that applies to the incorporation majority of the population. Standardized Company Page 5   before registration or up to 3 months after is legal plurality), the answer used will be the one that applies to the incorporation majority of the population. Doing Business 2018 Venezuela, RB Standardized Company Legal form Sociedad Anónima (SA) Paid-in minimum capital requirement VEF 0 City Covered Caracas Latin America & OECD high Indicator Venezuela, RB Caribbean income Overall Best Performer Procedure – Men (number) 20 8.4 4.9 1.00 (New Zealand) Time – Men (days) 230 31.7 8.5 0.50 (New Zealand) Cost – Men (% of income per capita) 351.6 37.5 3.1 0.00 (United Kingdom) Procedure – Women (number) 20 8.5 4.9 1.00 (New Zealand) Time – Women (days) 230 31.8 8.5 0.50 (New Zealand) Cost – Women (% of income per capita) 351.6 37.5 3.1 0.00 (United Kingdom) Paid-in min. capital (% of income per capita) 0.0 2.1 8.7 0.00 (113 Economies) Figure – Starting a Business in Venezuela and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 85.84: Mexico (Rank: 90) 78.09: Regional Average (Latin America & Caribbean) 75.15: Argentina (Rank: 157) 65.05: Brazil (Rank: 176) 62.95: Bolivia (Rank: 179) 25.00: Venezuela, RB (Rank: 190) Note: The ranking of economies on the ease of starting a business is determined by sorting their distance to frontier scores for starting a business. These scores are the simple average of the distance to frontier scores for each of the component indicators. Figure – Starting a Business in Venezuela, RB – Procedure, Time and Cost Time Cost 350 200 300 ost (% of income per capita) 250 150 Time (days) 200 100 150 Page 6   100 starting a business. These scores are the simple average of the distance to frontier scores for each of the component indicators. Doing Business 2018 Venezuela, RB Figure – Starting a Business in Venezuela, RB – Procedure, Time and Cost Time Cost 350 200 300 Cost (% of income per capita) 250 150 Time (days) 200 100 150 100 50 50 0 0 1 2 3 4 5 *6 *7 8 9 10 * 11 * 12 13 14 * 15 * 16 * 17 * 18 * 19 * 20 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a di erent procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://www.doingbusiness.org/methodology). For details on the procedures re ected here, see the summary below. Details – Starting a Business in Venezuela, RB – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Reserve company name 4 days VEF 150 (0.5 UT Agency : Commercial Registry name search) + VEF 600 (2 UT name To reserve a company name, founders must buy the name search form reservation) (busqueda de la denominación) at the Registry. The cost for the name search is 0.5 UT and the cost for the name reservation is 2 UT. As of February 2017, the new value of the U.T. increased from VEF 177 to VEF 300 (Extraordinary O cial Gazette N° 6.287). 2 Obtain an approval of the company name 3 days no charge Agency : Commercial Registry After reserving the company name, the applicant must pay the cited fee at a bank and later return to the Registry to show the bank deposit slip and obtain the company name approval. 3 Have the company’s constitutive documents and social statutes prepared 5 days VEF 200,000 to VEF and legalized by a lawyer 225,000 Agency : Lawyer Legal assessment is required in the procurement of the company incorporation documents; the assessment must follow all formalities cited in Articles 211 to 215 of the Code of Commerce. 4 Open a bank account 1 day no charge Agency : Bank Page 7   The Mercantile Registry requires evidence of a bank account. Although (http://www.doingbusiness.org/methodology). For details on the procedures re ected here, see the summary below. Doing Business 2018 Venezuela, RB Details – Starting a Business in Venezuela, RB – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Reserve company name 4 days VEF 150 (0.5 UT Agency : Commercial Registry name search) + VEF 600 (2 UT name To reserve a company name, founders must buy the name search form reservation) (busqueda de la denominación) at the Registry. The cost for the name search is 0.5 UT and the cost for the name reservation is 2 UT. As of February 2017, the new value of the U.T. increased from VEF 177 to VEF 300 (Extraordinary O cial Gazette N° 6.287). 2 Obtain an approval of the company name 3 days no charge Agency : Commercial Registry After reserving the company name, the applicant must pay the cited fee at a bank and later return to the Registry to show the bank deposit slip and obtain the company name approval. 3 Have the company’s constitutive documents and social statutes prepared 5 days VEF 200,000 to VEF and legalized by a lawyer 225,000 Agency : Lawyer Legal assessment is required in the procurement of the company incorporation documents; the assessment must follow all formalities cited in Articles 211 to 215 of the Code of Commerce. 4 Open a bank account 1 day no charge Agency : Bank The Mercantile Registry requires evidence of a bank account. Although founders commonly deposit 20% of declared capital, there is no minimum amount; by law, the Registrar determines the required amount. 5 Register at the local mercantile registry (Registro Mercantil) 34 days Fee schedule for Agency : Commercial Registry company registration and Founders must register with the local mercantile registry. This procedure must incorporation: be done within 30 days of name reservation. The employer must ll out and 1% of the capital + submit a registration (derechos registrales) form. VEF 1800 (6 UT for a fixed fee) + VEF 1500 (5 UT for the fiscal rights) + VEF 150 (0.05 UT per page of the articles of association) + VEF 30 (per page stamp tax for original document, registry copy and company copy). 6 Publish articles in a local newspaper (Gaceta Forense del Registro 3 days VEF 4,000 Mercantil) (simultaneous with Agency : Local Newspaper previous procedure) Page 8   The company's articles of association must be published in a local newspaper. copy and company Doing Business 2018 Venezuela, RB copy). 6 Publish articles in a local newspaper (Gaceta Forense del Registro 3 days VEF 4,000 Mercantil) (simultaneous with Agency : Local Newspaper previous procedure) The company's articles of association must be published in a local newspaper. 7 Register company books 1 day VEF 950 per each Agency : Commercial Registry (simultaneous with book + VEF 9 (0.03 previous UT) fixed fee + 30 Companies must purchase the books and register corporate books procedure) VEF (0.001 UT per (Shareholders' Book, Shareholders’ Meeting Minutes Book and, if applicable, page per Board of Directors Minutes Book) and accounting books (Inventory Book, Daily registration, each Book and Ledger). book has 100 pages) 8 Register at the Tax Authorities (Servicio Nacional Integrado de 1 day no charge Administración Aduanera y Tributaria, SENIAT) to obtain a scal number (Registro Unico de Información Fiscal, RIF) Agency : Tax Authority (SENIAT) The entrepreneur must register at the Registro Unico de Información Fiscal (RIF) to obtain a scal number, within SENIAT, the National Integrated Service of Customs and Tax Administration. The company must le an electronic form which is downloaded from SENIAT’s Web page (www.seniat.gov.ve). Such form must be led along with the required documentation. 9 Obtain a tax clearance certi cate at municipal level (Instituto Municipal 1 day VEF 60 (0.2 UT) de Aseo Urbano) Agency : Municipal Institute for Urban Cleaning (Instituto Municipal de Aseo Urbano) A tax clearance certi cate must be obtained. 10 Register at the Social Security Institute 130 days no charge Agency : Social Security Institute (IVSS) Registering for social security can take up to 6 months. Since 2015, the applicants can register online at http://registro.ivss.gov.ve/home.htm. The application must then be led in person before the Social Security along with the required attachments. Register at National Bank for Housing and Habitat - Banco Nacional de 1 day no charge 11 Vivienda y Habitat (BANAVIH) (simultaneous with Agency : Bank for Housing and Habitat (BANAVIH) previous procedure) The employers must register with BANAVIH through its website: www.banavih.gov.ve. Employers must verify their list of employees monthly and pay the contribution. Register at the National Institute of Socialist Cooperation & Education 1 day no charge 12 Agency : National Institute of Socialist Cooperation & Education (simultaneous with previous Employers with a minimum of ve employees must register at the National procedure) Educational Co-operation Institute; the employees’ social security numbers are required. 13 Register with the Ministry of Labor 1 day no charge Agency : Ministry of Labor The company and the company employees have to register with the Ministry of Labor. The Registration also includes the Statistics Register and the Department of Hygiene and Safety. The applicants can register online at Page 9   procedure) Educational Co-operation Institute; the employees’ social security numbers are Doingrequired. Business 2018 Venezuela, RB 13 Register with the Ministry of Labor 1 day no charge Agency : Ministry of Labor The company and the company employees have to register with the Ministry of Labor. The Registration also includes the Statistics Register and the Department of Hygiene and Safety. The applicants can register online at www.mintra.gob.ve. The application must then be led in person before the Ministry of Labor along with the required attachments. 14 Go through a labor inspection (by the Labor Inspectorate) 14 days VEF 30 (0.1 UT Agency : Labor Inspector O ce stamp cost) The Labor Inspectorate inspects the business premises. Obtain re approval and undergo an inspection 28 days no charge 15 Agency : Fire Department (simultaneous with previous It is necessary to obtain an approval from the Fire ghters' Department. It procedure) takes 8 days for assignment of an operating inspector and 15–20 days for a response to be provided. Once the inspector is assigned, he/she will perform an inspection at the place of business to establish whether all security requirements are met. After inspection, an approval from the Agency will be obtained if all the requirements are met. Obtain conformity of use certi cate (zoning permit) 15 days VEF 1500 (5 UT) + 16 Agency : Municipality (simultaneous with VEF 6 (0.02 UT) previous stamp A conformity of use certi cate must be obtained. Documents required are the procedure) mercantile registration, external building maps, and a photo of the premises. Obtain industrial or commercial license from competent municipality 50 days VEF 3000 (10 UT) + 17 Agency : Municipality (simultaneous with VEF 6 (0.02 UT) previous To obtain an industrial or commercial license from a competent municipality, procedure) the founders must le copies of registration, a sanitation certi cate, the lease of the premises, the latest balance sheet, and a declaration of the number of employees. Register at the National Commission for People with Disabilities 1 day No charge 18 Agency : National Council for People with Disabilities (CONAPDIS) In order to register companies must complete the form provided on line at http://sistemaspruebas.conapdis.gob.ve/publico/deseo_registrarme_empresa. In order to access the website, companies need to obtain a login and username. Once that is done, registration is done immediately. Register at the National Superintendence for the Defense of 1 day No charge 19 Socioeconomic Rights (SUNDDE) Agency : National Superintendence for the Defense of Socio-Economic Rights (SUNDDE) It is necessary to register at the Sole Registry of Venezuelan Individuals and Legal Entities who Develop Economic and Commercial Activities in Venezuela (Registro Unico de Personas Que Desarollan Actividades Economicas, RUPDAE), a registry created by the Organic Law of Fair Prices (November, 2014). RUPDAE is part of the Superintendence of Fair Prices (Superintendencia de Precios Justos), within the National Superintendence for the Defense of Socioe conomic Rights (SUNDDE). Page 10   The registration can be done online at the following site: In order to access the website, companies need to obtain a login and BusinessOnce Doingusername. 2018 is done, registration that Venezuela, RB is done immediately. Register at the National Superintendence for the Defense of 1 day No charge 19 Socioeconomic Rights (SUNDDE) Agency : National Superintendence for the Defense of Socio-Economic Rights (SUNDDE) It is necessary to register at the Sole Registry of Venezuelan Individuals and Legal Entities who Develop Economic and Commercial Activities in Venezuela (Registro Unico de Personas Que Desarollan Actividades Economicas, RUPDAE), a registry created by the Organic Law of Fair Prices (November, 2014). RUPDAE is part of the Superintendence of Fair Prices (Superintendencia de Precios Justos), within the National Superintendence for the Defense of Socioe conomic Rights (SUNDDE). The registration can be done online at the following site: http://rupdae.superintendenciadepreciosjustos.gob.ve/usuarios/inscripcion or in person. The majority of companies go in person to agency to register. Register at the National Institute of Prevention, Occupational Health and 1 day No charge 20 Safety (INPSASEL) Agency : National Institute of Prevention, Occupational Health and Safety (INPSASEL) Companies must register online at the following site. http://usuarios.inpsasel.gob.ve/login/registro The procedures provides a registration number which companies will use in further interactions with government after it starts operations. Applies to women only. Takes place simultaneously with previous procedure. Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required noti cations, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certi cation requirements. The most recent round of data collection was completed in June 2017. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse (number) To make the data comparable across economies, several assumptions about the construction company, the warehouse project and the utility Submitting all relevant documents and obtaining connections are used. all necessary clearances, licenses, permits and certificates The construction company (BuildCo): Submitting all required notifications and - Is a limited liability company (or its legal equivalent) and operates in the receiving all necessary inspections economy’s largest business city. For 11 economies the data are also collected for the second largest business city. Obtaining utility connections for water and - Is 100% domestically and privately owned; has ve owners, none of whom sewerage is a legal entity. Has a licensed architect and a licensed engineer, both Registering and selling the warehouse after its registered with the local association of architects or engineers. BuildCo is completion not assumed to have any other employees who are technical or licensed Time required to complete each procedure experts, such as geological or topographical experts. (calendar days) - Owns the land on which the warehouse will be built and will sell the Page 11   warehouse upon its completion. Applies to women only. Takes place simultaneously with previous procedure. Doing Business 2018 Venezuela, RB Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required noti cations, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certi cation requirements. The most recent round of data collection was completed in June 2017. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse (number) To make the data comparable across economies, several assumptions about the construction company, the warehouse project and the utility Submitting all relevant documents and obtaining connections are used. all necessary clearances, licenses, permits and certificates The construction company (BuildCo): Submitting all required notifications and - Is a limited liability company (or its legal equivalent) and operates in the receiving all necessary inspections economy’s largest business city. For 11 economies the data are also collected for the second largest business city. Obtaining utility connections for water and - Is 100% domestically and privately owned; has ve owners, none of whom sewerage is a legal entity. Has a licensed architect and a licensed engineer, both Registering and selling the warehouse after its registered with the local association of architects or engineers. BuildCo is completion not assumed to have any other employees who are technical or licensed Time required to complete each procedure experts, such as geological or topographical experts. (calendar days) - Owns the land on which the warehouse will be built and will sell the warehouse upon its completion. Does not include time spent gathering information The warehouse: Each procedure starts on a separate day— - Will be used for general storage activities, such as storage of books or though procedures that can be fully completed stationery. online are an exception to this rule - Will have two stories, both above ground, with a total constructed area of Procedure is considered completed once final approximately 1,300.6 square meters (14,000 square feet). Each oor will document is received be 3 meters (9 feet, 10 inches) high and will be located on a land plot of No prior contact with officials approximately 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the warehouse is valued at 50 times income per capita. Cost required to complete each procedure (% of - Will have complete architectural and technical plans prepared by a warehouse value) licensed architect. If preparation of the plans requires such steps as Official costs only, no bribes obtaining further documentation or getting prior approvals from external Building quality control index (0-15) agencies, these are counted as procedures. - Will take 30 weeks to construct (excluding all delays due to administrative Sum of the scores of six component indices: and regulatory requirements). Quality of building regulations (0-2) The water and sewerage connections: Quality control before construction (0-1) - Will be 150 meters (492 feet) from the existing water source and sewer Quality control during construction (0-3) tap. If there is no water delivery infrastructure in the economy, a borehole Quality control after construction (0-3) will be dug. If there is no sewerage infrastructure, a septic tank in the smallest size available will be installed or built. Liability and insurance regimes (0-2) - Will have an average water use of 662 liters (175 gallons) a day and an Professional certifications (0-4) average wastewater ow of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and a peak wastewater ow of 1,136 liters (300 gallons) a day. - Will have a constant level of water demand and wastewater ow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Standardized Warehouse Page 12   and 4 inches in diameter for the sewerage connection. Doing Business 2018 Venezuela, RB Standardized Warehouse Estimated value of warehouse VEF 4,285,381.20 City Covered Caracas Latin America & OECD high Indicator Venezuela, RB Caribbean income Overall Best Performer Procedures (number) 11 15.7 12.5 7.00 (Denmark) Time (days) 434 191.8 154.6 27.5 (Korea, Rep.) Cost (% of warehouse value) 1.8 3.2 1.6 0.10 (5 Economies) Building quality control index (0-15) 10.5 8.8 11.4 15.00 (3 Economies) Figure – Dealing with Construction Permits in Venezuela and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 68.28: Mexico (Rank: 87) 63.59: Regional Average (Latin America & Caribbean) 59.27: Venezuela, RB (Rank: 143) 55.56: Bolivia (Rank: 158) 49.83: Brazil (Rank: 170) 49.27: Argentina (Rank: 171) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their distance to frontier scores for dealing with construction permits. These scores are the simple average of the distance to frontier scores for each of the component indicators. Figure – Dealing with Construction Permits in Venezuela, RB – Procedure, Time and Cost Time Cost 0.7 400 0.6 350 Cost (% of warehouse value) 300 0.5 Time (days) 250 0.4 200 0.3 150 0.2 100 0.1 50 0 0 1 *2 *3 *4 5 *6 7 8 9 * 10 * 11 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Page 13   component indicators. Doing Business 2018 Venezuela, RB Figure – Dealing with Construction Permits in Venezuela, RB – Procedure, Time and Cost Time Cost 0.7 400 0.6 350 Cost (% of warehouse value) 300 0.5 Time (days) 250 0.4 200 0.3 150 0.2 100 0.1 50 0 0 1 *2 *3 *4 5 *6 7 8 9 * 10 * 11 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a di erent procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://www.doingbusiness.org/methodology). For details on the procedures re ected here, see the summary below. Figure – Dealing with Construction Permits in Venezuela, RB and comparator economies – Measure of Quality 14 11.7 12 11.0 10.5 10 9.0 8.8 Index score 8 7.0 6 4 2 0 Venezuela, RB Argentina Bolivia Brazil Mexico Latin America & Caribbean Details – Dealing with Construction Permits in Venezuela, RB – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Request and obtain the assignment of the basic urban variables for land 171 days VEF 5 development Agency : Dirección de Desarrollo Urbano y Catastro del Municipio BuildCo must request assignment of the Basic Urban Variables stipulated by the Organic Law for Urban Development. Alternatively, a preliminary consultation or an architectural draft is prepared in order to assess compliance with the Basic Urban Variables for Buildings. 2 Request and obtain a Soil Test 20 days USD 700 Page 14   Agency : Private Enterprise - Laboratory Venezuela, RB Argentina Bolivia Brazil Mexico Latin America & Caribbean Doing Business 2018 Venezuela, RB Details – Dealing with Construction Permits in Venezuela, RB – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Request and obtain the assignment of the basic urban variables for land 171 days VEF 5 development Agency : Dirección de Desarrollo Urbano y Catastro del Municipio BuildCo must request assignment of the Basic Urban Variables stipulated by the Organic Law for Urban Development. Alternatively, a preliminary consultation or an architectural draft is prepared in order to assess compliance with the Basic Urban Variables for Buildings. 2 Request and obtain a Soil Test 20 days USD 700 Agency : Private Enterprise - Laboratory A soil test is listed by "Norma Venezolana COVENIN 1618-98" as a requirement to obtain a building permit and other procedures. In practice, contractors ask for a soil test to ensure that the foundation of the building is solid. The engineer must understand the suitability of the soil for the proposed construction work. A soil test is essential to build a solid foundation and prevent structures from being damaged, collapsed or leaned. 3 Obtain a topographical map 15 days USD 1,500 Agency : Private engineer or quali ed topographer A topographic survey is required by Chapter H-15 of "Norma Venezolana COVENIN 1618-98". Moreover, in practice, contractors will need a topographical survey to draw the site plan. 4 Request and obtain a certi cate from the Zoning and Road Construction 144 days VEF 21,460 Division Agency : Zoning and Road Construction Division BuildCo must also obtain a certi cate stating that the new project is compatible with the existing or planned roads from the Zoning and Road Construction Division in order to obtain a certi cate of compliance with basic urban variables for buildings. 5 Request and obtain a certi cate of compliance with basic urban 48 days no charge variables for buildings Agency : Dirección de Desarrollo Urbano y Catastro del Municipio The certi cate of compliance with Basic Urban Variables is required to begin the construction. 6 Pay the corresponding fees at the bank 1 day VEF 25,362 Agency : Commercial Bank Municipal taxes and fees are paid at any commercial bank at which the municipality has an account. 7 Notify intention to begin construction to Municipality 1 day no charge Agency : Dirección de Desarrollo Urbano y Catastro del Municipio After the payment has been made, BuildCo. noti es the Municipality its Page 15   intent to begin the warehouse construction. Municipal taxes and fees are paid at any commercial bank at which the Doing municipality Business 2018has an account. Venezuela, RB 7 Notify intention to begin construction to Municipality 1 day no charge Agency : Dirección de Desarrollo Urbano y Catastro del Municipio After the payment has been made, BuildCo. noti es the Municipality its intent to begin the warehouse construction. 8 Request and receive a re inspection 1 day VEF 1,050 Agency : Fire Department Once construction has started, BuildCo. requests this inspection at the municipal re station. The re inspection approval certi cate is delivered by the Fire Department the day after the inspection is performed, provided that the building complies with the Fire Department Regulations and the Commission for Industrial Standards (COVENIN) standards. If the building does not comply with these regulations, the Fire Department draws up a report stating that the inspection has not been approved and detailing those aspects that must be corrected in the building in order to pass the re inspection. 9 Request and connect to water supply and sewage service 213 days no charge Agency : Hidrocapital Water supply is obtained through connection to the sector’s main pipeline, following a request to the corresponding company, which, in this case, is Hidrocapital. In some cases, buildings have their own groundwater well, making it unnecessary to request water supply services from Hidrocapital. Connection to the sewage system depends on whether this service exists in the sector where the building is located. If there is no sewage system, the Zoning and Road Construction Division (Dirección de Desarrollo Urbano y Catastro) requires the installation of septic tanks or waste treatment plants for wastes to be treated before being discharged into the environment. Depending on the size of the building and its intended use, the appropriate permits must be requested at the Ministry of People's Power for Environment (changed in 2007 from the Ministry of the Environment and Natural Resources), because such wastes might have a negative impact on the environment. Due to a backlog and a massive number of applications, this takes on average 6 months. Receive nal inspection and obtain construction completion certi cate 16 days no charge 10 Agency : Dirección de Desarrollo Urbano y Catastro del Municipio Once the construction has been completed, and installations made, BuildCo. can obtain a construction completion certi cate. To obtain the permit, the Fire Department certi cate is mandatory, as is compliance with all applicable regulations. Register the building at the Subordinate Registry (Registro Subalterno) 16 days VEF 8,300 11 Agency : Subordinate Registry (Registro Subalterno) After the water supply and sewage services are instaleld, BuildCo. can register the new warehouse at the Subordinate Registry (Registro Subalterno) during or after construction. The title to the land on which the building is constructed and building plans must be submitted so Registry o cials can calculate the building registration fee. Takes place simultaneously with previous procedure. Details – Dealing with Construction Permits in Venezuela, RB – Measure of Quality Page 16   Takes place simultaneously with previous procedure. Doing Business 2018 Venezuela, RB Details – Dealing with Construction Permits in Venezuela, RB – Measure of Quality Answer Score Building quality control index (0-15) 10.5 Quality of building regulations index (0-2) 1.5 How accessible are building laws and regulations in your economy? (0-1) Free of charge; In 0.5 o cial gazette; Not easily accessible. Which requirements for obtaining a building permit are clearly speci ed in the building List of required 1.0 regulations or on any accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in Licensed 1.0 compliance with existing building regulations? (0-1) architect; Licensed engineer. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during Inspections by 1.0 construction? (0-2) in-house engineer. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a nal inspection required by law to verify that the building was built in Yes, nal 2.0 accordance with the approved plans and regulations? (0-2) inspection is done by government agency. Do legally mandated nal inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 1.0 Which parties (if any) are held liable by law for structural aws or problems in the Architect or 1.0 building once it is in use (Latent Defect Liability or Decennial Liability)? (0-1) engineer; Professional in charge of the supervision; Construction company; Owner or investor. Page 17   Takes place simultaneously with previous procedure. Doing Business 2018 Venezuela, RB Details – Dealing with Construction Permits in Venezuela, RB – Measure of Quality Answer Score Building quality control index (0-15) 10.5 Quality of building regulations index (0-2) 1.5 How accessible are building laws and regulations in your economy? (0-1) Free of charge; In 0.5 o cial gazette; Not easily accessible. Which requirements for obtaining a building permit are clearly speci ed in the building List of required 1.0 regulations or on any accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in Licensed 1.0 compliance with existing building regulations? (0-1) architect; Licensed engineer. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during Inspections by 1.0 construction? (0-2) in-house engineer. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a nal inspection required by law to verify that the building was built in Yes, nal 2.0 accordance with the approved plans and regulations? (0-2) inspection is done by government agency. Do legally mandated nal inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 1.0 Which parties (if any) are held liable by law for structural aws or problems in the Architect or 1.0 building once it is in use (Latent Defect Liability or Decennial Liability)? (0-1) engineer; Professional in charge of the supervision; Construction company; Owner or investor. Page 18   Liability Doing 2018 regimes and insurance Business index (0-2) Venezuela, RB 1.0 Which parties (if any) are held liable by law for structural aws or problems in the Architect or 1.0 building once it is in use (Latent Defect Liability or Decennial Liability)? (0-1) engineer; Professional in charge of the supervision; Construction company; Owner or investor. Which parties (if any) are required by law to obtain an insurance policy to cover No party is 0.0 possible structural aws or problems in the building once it is in use (Latent Defect required by law Liability Insurance or Decennial Insurance)? (0-1) to obtain insurance . Professional certi cations index (0-4) 2.0 What are the quali cation requirements for the professional responsible for verifying University 1.0 that the architectural plans or drawings are in compliance with existing building degree in regulations? (0-2) architecture or engineering; Being a registered architect or engineer. What are the quali cation requirements for the professional who supervises the University 1.0 construction on the ground? (0-2) degree in engineering, construction or construction management; Being a registered architect or engineer. Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tari s index measures reliability of supply, transparency of tari s and the price of electricity. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection To make the data comparable across economies, several assumptions are (number) used. Submitting all relevant documents and obtaining The warehouse: all necessary clearances and permits - Is owned by a local entrepreneur and is used for storage of goods. Completing all required notifications and - Is located in the economy’s largest business city. For 11 economies the receiving all necessary inspections data are also collected for the second largest business city. Obtaining external installation works and possibly - Is located in an area where similar warehouses are typically located and is purchasing material for these works in an area with no physical constraints. For example, the property is not Concluding any necessary supply contract and near a railway. obtaining final supply - Is a new construction and is being connected to electricity for the rst Page 19   time. architect or engineer. Doing Business 2018 Venezuela, RB Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tari s index measures reliability of supply, transparency of tari s and the price of electricity. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection To make the data comparable across economies, several assumptions are (number) used. Submitting all relevant documents and obtaining The warehouse: all necessary clearances and permits - Is owned by a local entrepreneur and is used for storage of goods. Completing all required notifications and - Is located in the economy’s largest business city. For 11 economies the receiving all necessary inspections data are also collected for the second largest business city. Obtaining external installation works and possibly - Is located in an area where similar warehouses are typically located and is purchasing material for these works in an area with no physical constraints. For example, the property is not Concluding any necessary supply contract and near a railway. obtaining final supply - Is a new construction and is being connected to electricity for the rst time. Time required to complete each procedure - Has two stories with a total surface area of approximately 1,300.6 square (calendar days) meters (14,000 square feet). The plot of land on which it is built is 929 Is at least 1 calendar day square meters (10,000 square feet). Each procedure starts on a separate day Does not include time spent gathering The electricity connection: information - Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140-kilo-volt-ampere (kVA) with a power factor of 1, Reflects the time spent in practice, with little when 1 kVA = 1 kilowatt (kW). follow-up and no prior contact with officials - Has a length of 150 meters. The connection is to either the low- or Cost required to complete each procedure (% of medium-voltage distribution network and is either overhead or income per capita) underground, whichever is more common in the area where the warehouse is located and requires works that involve the crossing of a 10- Official costs only, no bribes meter road (such as by excavation or overhead lines) but are all carried out Value added tax excluded on public land. There is no crossing of other owners’ private property The reliability of supply and transparency of because the warehouse has access to a road. tari s index (0-8) - Does not require work to install the internal wiring of the warehouse. This has already been completed up to and including the customer’s service Duration and frequency of power outages (0–3) panel or switchboard and the meter base. Tools to monitor power outages (0–1) Tools to restore power supply (0–1) The monthly consumption: Regulatory monitoring of utilities’ performance - It is assumed that the warehouse operates 30 days a month from 9:00 (0–1) a.m. to 5:00 p.m. (8 hours a day), with equipment utilized at 80% of capacity Financial deterrents limiting outages (0–1) on average and that there are no electricity cuts (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours Transparency and accessibility of tariffs (0–1) (kWh); hourly consumption is 112 kWh. Price of electricity (cents per kilowatt-hour)* - If multiple electricity suppliers exist, the warehouse is served by the Price based on monthly bill for commercial cheapest supplier. warehouse in case study - Tari s e ective in March of the current year are used for calculation of the price of electricity for the warehouse. Although March has 31 days, for * N o t e : Doing Business m e a s u r e s t h e p r i c e o f calculation purposes only 30 days are used. electricity, but it is not included in the distance to frontier score nor the ranking on the ease of getting electricity. Page 20   Standardized Connection frontier score nor the ranking on the ease of getting electricity. Doing Business 2018 Venezuela, RB Standardized Connection Price of electricity (US cents per kWh) 704.6 Name of utility Corpoelec City Covered Caracas Latin America & OECD high Indicator Venezuela, RB Caribbean income Overall Best Performer Procedures (number) 6 5.5 4.7 2 (United Arab Emirates) Time (days) 208 66.0 79.1 10 (United Arab Emirates) Cost (% of income per capita) 16713.5 927.4 63.0 0.00 (Japan) Reliability of supply and transparency of tariff 0 4.2 7.4 8.00 (28 Economies) index (0-8) Figure – Getting Electricity in Venezuela and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 82.46: Brazil (Rank: 45) 70.99: Mexico (Rank: 92) 70.45: Regional Average (Latin America & Caribbean) 70.01: Argentina (Rank: 95) 68.18: Bolivia (Rank: 101) 16.85: Venezuela, RB (Rank: 186) Note: The ranking of economies on the ease of getting electricity is determined by sorting their distance to frontier scores for getting electricity. These scores are the simple average of the distance to frontier scores for each of the component indicators. Figure – Getting Electricity in Venezuela, RB – Procedure, Time and Cost Time Cost 18000 200 16000 Cost (% of income per capita) 14000 150 12000 Time (days) 10000 100 8000 6000 50 4000 Page 21   2000 getting electricity. These scores are the simple average of the distance to frontier scores for each of the component indicators. Doing Business 2018 Venezuela, RB Figure – Getting Electricity in Venezuela, RB – Procedure, Time and Cost Time Cost 18000 200 16000 Cost (% of income per capita) 14000 150 12000 Time (days) 10000 100 8000 6000 50 4000 2000 0 0 1 *2 3 4 *5 6 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a di erent procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://www.doingbusiness.org/methodology). For details on the procedures re ected here, see the summary below. Figure – Getting Electricity in Venezuela, RB and comparator economies – Measure of Quality 8 7 7 6 6 5.4 5 Index score 5 4.2 4 3 2 1 0 0 Venezuela, RB Argentina Bolivia Brazil Mexico Latin America & Caribbean Details – Getting Electricity in Venezuela, RB – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Hire certi ed electrician to prepare design and submit application to 85 calendar days VEF 456,987 Corpoelec Agency : Corpoelec The application must be submitted with legal property titles, ID of the client and a draft design of the connection made by a certi ed electrician ("electricista colegiado"). 2 Receive external inspection by Corpoelec 1 calendar day VEF 0 Agency : Corpoelec Corpoelec carries out an external inspection to determine the connections works to be carried out and if an expansion or extension of the network is Page 22   Venezuela, RB Argentina Bolivia Brazil Mexico Latin America & Caribbean Doing Business 2018 Venezuela, RB Details – Getting Electricity in Venezuela, RB – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Hire certi ed electrician to prepare design and submit application to 85 calendar days VEF 456,987 Corpoelec Agency : Corpoelec The application must be submitted with legal property titles, ID of the client and a draft design of the connection made by a certi ed electrician ("electricista colegiado"). 2 Receive external inspection by Corpoelec 1 calendar day VEF 0 Agency : Corpoelec Corpoelec carries out an external inspection to determine the connections works to be carried out and if an expansion or extension of the network is needed. It is not compulsory although recommended that the client and/or the client's electrician be present during the inspection. A cost estimate is then sent to the client. The estimate must be paid at the premises of Corpoelec with a check at the headquarters of Corpoelec in San Bernardino. A connection of less than 36 KvA does not need a project if the distance to the network is less than 12 meters for underground connections and 30 meters for overhead. 3 Obtain excavation permit from municipality 90 calendar days VEF 6,500 Agency : Municipality The client must obtain an excavation permit for the underground connection from the Municipality. In other cases, for an overhead connection a permit is not necessary but this must be explicitly indicated in the design of the connection submitted by the applicant to the utility. 4 Pay estimate and await completion of external works by electrician 30 calendar days VEF 13,861,250 Agency : Electrician Once the estimate has been paid, Corpoelec ires a team to carry out the external works. As a public enterprise, Corpoelec has to comply with public procurement rules when hiring the team, which can take around 8 months. Corpoelec o ers the possibility of the "mandato" in which the client can hire himself an electrician to carry out the external works. Corpoelec appoints an inspector who will watch the progress of the works and will sign the certi cate (" niquito de obra") approving that the works meet the standards of Corpoelec. Under the "mandato", the client pays the market price, thus the cost is higher than when Corpoelec carries out the works, but reduces the time to obtain a connection. 5 Receive nal inspection by Corpoelec 1 calendar day VEF 0 Agency : Corpoelec When the client opts for the "mandato", Corpoelec carries out a nal inspection and delivers a certi cate of conformity of the works (" niquito de obra"). 6 Sign supply contract with Corpoelec 3 calendar days VEF 0 Agency : Corpoelec The client signs a supply contract with Corpoelec and can be exempted from Page 23   inspection and delivers a certi cate of conformity of the works (" niquito de Doing obra"). Business 2018 Venezuela, RB 6 Sign supply contract with Corpoelec 3 calendar days VEF 0 Agency : Corpoelec The client signs a supply contract with Corpoelec and can be exempted from the payment of the security deposit if a bank account or credit card is registered to cover the monthly bill payment. This can be done in any of the commercial o ces of Corpoelec of Caracas. Takes place simultaneously with previous procedure. Details – Getting Electricity in Venezuela, RB – Measure of Quality Answer Reliability of supply and transparency of tari index (0-8) 0 Total duration and frequency of outages per customer a year (0-3) 0 System average interruption duration index (SAIDI) .. System average interruption frequency index (SAIFI) .. What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI N/A Mechanisms for monitoring outages (0-1) 0 Does the distribution utility use automated tools to monitor outages? No Mechanisms for restoring service (0-1) 0 Does the distribution utility use automated tools to restore service? No Regulatory monitoring (0-1) 0 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on No reliability of supply? Financial deterrents aimed at limiting outages (0-1) 0 Does the utility either pay compensation to customers or face nes by the regulator (or both) if outages No exceed a certain cap? Communication of tari s and tari changes (0-1) 0 Are e ective tari s available online? No Link to the website, if available online n.a Are customers noti ed of a change in tari ahead of the billing cycle? No Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tari index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 24   Takes place simultaneously with previous procedure. Doing Business 2018 Venezuela, RB Details – Getting Electricity in Venezuela, RB – Measure of Quality Answer Reliability of supply and transparency of tari index (0-8) 0 Total duration and frequency of outages per customer a year (0-3) 0 System average interruption duration index (SAIDI) .. System average interruption frequency index (SAIFI) .. What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI N/A Mechanisms for monitoring outages (0-1) 0 Does the distribution utility use automated tools to monitor outages? No Mechanisms for restoring service (0-1) 0 Does the distribution utility use automated tools to restore service? No Regulatory monitoring (0-1) 0 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on No reliability of supply? Financial deterrents aimed at limiting outages (0-1) 0 Does the utility either pay compensation to customers or face nes by the regulator (or both) if outages No exceed a certain cap? Communication of tari s and tari changes (0-1) 0 Are e ective tari s available online? No Link to the website, if available online n.a Are customers noti ed of a change in tari ahead of the billing cycle? No Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tari index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has ve dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on immovable Page 25   To make the data comparable across economies, several assumptions If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Doing Business 2018 Venezuela, RB Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has ve dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on immovable To make the data comparable across economies, several assumptions property (number) about the parties to the transaction, the property and the procedures are used. Preregistration procedures (for example, checking for liens, notarizing sales agreement, The parties (buyer and seller): paying property transfer taxes) - Are limited liability companies (or the legal equivalent). Registration procedures in the economy's largest - Are located in the periurban area of the economy’s largest business city. business citya. For 11 economies the data are also collected for the second largest Postregistration procedures (for example, filling business city. title with municipality) - Are 100% domestically and privately owned. Time required to complete each procedure - Have 50 employees each, all of whom are nationals. (calendar days) - Perform general commercial activities. Does not include time spent gathering information The property (fully owned by the seller): - Has a value of 50 times income per capita, which equals the sale price. Each procedure starts on a separate day - though - Is fully owned by the seller. procedures that can be fully completed online - Has no mortgages attached and has been under the same ownership for are an exception to this rule the past 10 years. Procedure is considered completed once final - Is registered in the land registry or cadastre, or both, and is free of title document is received disputes. No prior contact with officials - Is located in a periurban commercial zone, and no rezoning is required. Cost required to complete each procedure (% of - Consists of land and a building. The land area is 557.4 square meters property value) (6,000 square feet). A two-story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in Official costs only (such as administrative fees, good condition, has no heating system and complies with all safety duties and taxes). standards, building codes and legal requirements. The property, Value Added Tax, Capital Gains Tax and illicit consisting of land and building, will be transferred in its entirety. payments are excluded - Will not be subject to renovations or additional construction following the Quality of land administration index (0-30) purchase. - Has no trees, natural water sources, natural reserves or historical Reliability of infrastructure index (0-8) monuments of any kind. Transparency of information index (0–6) - Will not be used for special purposes, and no special permits, such as for Geographic coverage index (0–8) residential use, industrial plants, waste storage or certain types of agricultural activities, are required. Land dispute resolution index (0–8) - Has no occupants, and no other party holds a legal interest in it. Equal access to property rights index (-2–0) Standard Property Transfer Property value VEF 4,285,381.20 City Covered Caracas Page 26   Latin America & OECD high Doing Business 2018 Venezuela, RB Standard Property Transfer Property value VEF 4,285,381.20 City Covered Caracas Latin America & OECD high Indicator Venezuela, RB Caribbean income Overall Best Performer Procedures (number) 9 7.2 4.6 1.00 (4 Economies) Time (days) 52 63.3 22.3 1.00 (3 Economies) Cost (% of property value) 2.7 5.8 4.2 0.00 (5 Economies) Quality of the land administration index (0-30) 5.5 12.0 22.7 29.00 (Singapore) Figure – Registering Property in Venezuela and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 60.81: Mexico (Rank: 99) 56.75: Argentina (Rank: 117) 55.36: Regional Average (Latin America & Caribbean) 52.60: Brazil (Rank: 131) 52.29: Venezuela, RB (Rank: 135) 49.89: Bolivia (Rank: 144) Note: The ranking of economies on the ease of registering property is determined by sorting their distance to frontier scores for registering property. These scores are the simple average of the distance to frontier scores for each of the component indicators. Figure – Registering Property in Venezuela, RB – Procedure, Time and Cost Time Cost 1.6 50 1.4 40 Cost (% of property value) 1.2 1 Time (days) 30 0.8 20 0.6 0.4 10 0.2 0 0 1 *2 *3 *4 *5 6 7 8 9 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Page 27   Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a di erent procedure list for registering property. These scores are the simple average of the distance to frontier scores for each of the component indicators. Doing Business 2018 Venezuela, RB Figure – Registering Property in Venezuela, RB – Procedure, Time and Cost Time Cost 1.6 50 1.4 40 Cost (% of property value) 1.2 1 Time (days) 30 0.8 20 0.6 0.4 10 0.2 0 0 1 *2 *3 *4 *5 6 7 8 9 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a di erent procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://www.doingbusiness.org/methodology). For details on the procedures re ected here, see the summary below. Figure – Registering Property in Venezuela, RB and comparator economies – Measure of Quality 18 16.3 16 13.5 13.8 14 12.0 12 Index score 10 8 7.0 5.5 6 4 2 0 Venezuela, RB Argentina Bolivia Brazil Mexico Latin America & Caribbean Details – Registering Property in Venezuela, RB – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Obtain a cadastral certi cate ( cha/cédula catastral) 10-30 days From 0.5 to 1.5 Tax Unit Agency : Cadaster o ce of the Municipality (simultaneous with (Unidad Tributaria) procedures 2, 3, 4 Obtaining a cadastral certi cate is a requirement for conducting a and 5) property transaction. This has the purpose of keeping an updated record of the ownership, the value and the physical characteristics of the property. This procedure is regulated by the Geography, Cartography, and Cadastral Law of March 28, 2000 (Chapter III, regarding the link between the Cadaster and the Public Registry) and Resolution N°019 of the Ministry of Popular Power for the Interior, Justice and Peace published on January 13, 2014 (O cial Gazette N°40,332, regarding the requirements for processing and registering transactions at the Public Page 28   Registries). Caracas is made up of ve municipalities: Libertador, Chacao, Venezuela, RB Argentina Bolivia Brazil Mexico Latin America & Caribbean Doing Business 2018 Venezuela, RB Details – Registering Property in Venezuela, RB – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Obtain a cadastral certi cate ( cha/cédula catastral) 10-30 days From 0.5 to 1.5 Tax Unit Agency : Cadaster o ce of the Municipality (simultaneous with (Unidad Tributaria) procedures 2, 3, 4 Obtaining a cadastral certi cate is a requirement for conducting a and 5) property transaction. This has the purpose of keeping an updated record of the ownership, the value and the physical characteristics of the property. This procedure is regulated by the Geography, Cartography, and Cadastral Law of March 28, 2000 (Chapter III, regarding the link between the Cadaster and the Public Registry) and Resolution N°019 of the Ministry of Popular Power for the Interior, Justice and Peace published on January 13, 2014 (O cial Gazette N°40,332, regarding the requirements for processing and registering transactions at the Public Registries). Caracas is made up of ve municipalities: Libertador, Chacao, Baruta, Sucre, and El Hatillo. The time and cost (from 0.5 to 1.5 Venezuelan Tax Unit) to complete this procedure varies depending on the municipality that has the territorial jurisdiction to issue the cadastral certi cate. 2 Obtain a certi cate of solvency from the Venezuelan Institute of less than a day no cost Social Security (IVSS) (online procedure Agency : Venezuelan Social Security Institute ("IVSS") simultaneous with procedures 1, 3, 4 Registration with the Social Security Institute is mandatory in Venezuela. and 5) This certi cate of solvency can be obtained online through the IVSS website, by providing the company's IVSS number. If the company is already registered with the IVSS, the certi cate will be issued online immediately. 3 Obtain the Municipal Solvency Certi cate at the Municipality 3 days VEF 390 (VEF 300 or 1 Tax Agency : Municipality (simultaneous with Unit for administrative procedures 1, 2, 4 fees + VEF 90 or 0,3 Tax The Municipal Solvency Certi cate (“Certi cado de Solvencia Municipal”) and 5) Units) ascertains whether a Property has any outstanding debts with the corresponding Tax administration. It must be obtained at the pertinent tax authority of the municipality where the immovable property is located. For this, the seller must request the statement of account of the immovable property that it wishes to dispose of, and proceed to the pertinent payment. The tax unit was increased as of February 2017 from VEF 177 to VEF 300(O cial Gazette number 6.287). 4 Obtain a certi cate of solvency from the water company 3 days 0.3 Tax Units Agency : Water Company (simultaneous with procedures 1, 2, 3 The seller presents his latest water bill that he has paid in order to obtain and 5) a certi cate of solvency ("solvencia de servicio") from the water company (Hidrocapital is the main supplier in the municipalities that conform Caracas). The Certi cate is valid for 30 days. 5 Obtain a non-encumbrance certi cate for the last 10 years from 3 days VEF 2520 for Registry (simultaneous with administrative fee. The Agency : Public Registry procedures 1, 2, 3 fee is calculated following and 4) article 83.2 of the The certi cate of encumbrances is not legally required, but it is usually Registry and Notary Law. obtained in practice (and requested by the purchaser). This example is a Pre-calculations on case of a title that covers the last ten years of the property. Page 29   applicable fees available (Hidrocapital is the main supplier in the municipalities that conform DoingCaracas). Business The Certi cate 2018 30 days. is valid forRB Venezuela, 5 Obtain a non-encumbrance certi cate for the last 10 years from 3 days VEF 2520 for Registry (simultaneous with administrative fee. The Agency : Public Registry procedures 1, 2, 3 fee is calculated following and 4) article 83.2 of the The certi cate of encumbrances is not legally required, but it is usually Registry and Notary Law. obtained in practice (and requested by the purchaser). This example is a Pre-calculations on case of a title that covers the last ten years of the property. applicable fees available at http://www.saren.gob.ve/ 6 Sales agreement is drafted by lawyer 2 days Lawyer’s fees according Agency : Lawyer to the following cumulative schedule According to the “Ley de Abogados” and the Public Registry Law (Article included in article 4 22), all documents that are presented to the Registry have to be approved by a lawyer. In practice, the lawyer also drafts the sales a) Up to Bs. 100.000,oo: agreement. The lawyer’s fees were estimated according to the Bs. 30.000,oo “Reglamento de Honorario Mínimo”. However, these guidelines are not binding for lawyers in Caracas. b) From Bs. 100.001,oo to Bs. 2.000.000,oo: 2.5% c) From Bs. 2.000.001,oo to Bs. 5.000.000,oo: 2% d) From Bs. 5.000.001,oo onwards: 1,5% The above schedule translates into the following in VEF: Property value (in VEF) : Lawyer fees - Under 100: VEF 30 - From 101 to 2,000: 2.5% of contract value - From 2,000 to 5,000: 2.0% of contract value - Over 5,000: 1.5% of contract value 7 The sale agreement is presented to the Registry O ce for its revision 1 day no cost and taxes and fees are liquidated Agency : Public Registry The sale agreement is presented to the local o ce of SAREN (Servicio Autónomo de Registros y Notarías) for the calculation of the following taxes and fees: a) SAREN's fees, which amount to 0.6% of the property value, according to the Law of Public Registries and Notaries of 2014 (the fee provisions entered into force on May 2015), and must be paid within 60 days of Page 30   assessment. - Over 5,000: 1.5% of Doing Business 2018 Venezuela, RB contract value 7 The sale agreement is presented to the Registry O ce for its revision 1 day no cost and taxes and fees are liquidated Agency : Public Registry The sale agreement is presented to the local o ce of SAREN (Servicio Autónomo de Registros y Notarías) for the calculation of the following taxes and fees: a) SAREN's fees, which amount to 0.6% of the property value, according to the Law of Public Registries and Notaries of 2014 (the fee provisions entered into force on May 2015), and must be paid within 60 days of assessment. b) Municipal tax, which amounts to 5 Tax Units. This means that the municipal tax amounts to VEF 1500 given the current value of the unit is VEF 300 since February 2017. An internal order of SAREN of 2008 established a "Previous Revision" procedure at the time of the assessment of the SAREN fees. This procedure was established to review the substance of the property transaction before the parties paid the applicable taxes and proceeded to present all documents for registration. Previous Revision procedures can add up to 5 days to the property transfer process, but do not guarantee that the registration application will be approved after the payment of taxes. Not all SAREN o ces have taken up this procedure, since ultimately it is not established by law, and seems to contradict the legally established celerity principle that governs registration procedures in Venezuela. 8 Payment of taxes at a private commercial bank 1 day 0.6% of purchase price Agency : Commercial Bank (SAREN fee) + 0.5% of purchase price (advance After the presentation of the sale agreement to the Public Registry, the payment of Income Tax) fees due to SAREN are paid in a private bank. The Income Tax must also + VEF 1500 (5 Tax Unit for be paid at the same private bank (0.5% of purchase price). Finally, a fee of Municipal Tax) VEF 1500 (equivalent to 5 Tax Units) has to be paid to the corresponding "Hacienda Pública Municipal" on its account at the bank. 9 Present all the documents to the Registry 4 weeks no cost Agency : Public Registry The user must go to the “Departamento de Presentaciones” in the Registry’s o ce and present the following documents: - sale document (obtained in procedure 6); - receipt of payments; - Municipal Solvency Certi cate (obtained in procedure 3); - Cadastral certi cate (obtained in procedure 1); - Solvency certi cate from the water company (obtained in procedure 4); - Solvency certi cate from the IVSS (obtained in procedure 2); - Copy of the means of payment for the transaction (check or bank transfer); This list of the required documents is regulated by Resolution N°019 of the Ministry of Popular Power for the Interior, Justice and Peace Page 31   published on January 13, 2014 (O cial Gazette N°40,332). Municipal Tax) VEF 1500 (equivalent to 5 Tax Units) has to be paid to the corresponding Doing"Hacienda Business 2018 Municipal" Pública on its Venezuela, account at the bank. RB 9 Present all the documents to the Registry 4 weeks no cost Agency : Public Registry The user must go to the “Departamento de Presentaciones” in the Registry’s o ce and present the following documents: - sale document (obtained in procedure 6); - receipt of payments; - Municipal Solvency Certi cate (obtained in procedure 3); - Cadastral certi cate (obtained in procedure 1); - Solvency certi cate from the water company (obtained in procedure 4); - Solvency certi cate from the IVSS (obtained in procedure 2); - Copy of the means of payment for the transaction (check or bank transfer); This list of the required documents is regulated by Resolution N°019 of the Ministry of Popular Power for the Interior, Justice and Peace published on January 13, 2014 (O cial Gazette N°40,332). The documentation is reviewed carefully by the Revision Department, verifying the identity of the owners, boundaries, the ful llment of judicial decisions related to the property, and other information. The date for the signature by the registrar is set and parties must come back on that day for the nal step. Since 2005, sta at the Registry is inclined to use discretion ("jurisprudencia") in dealing with cases and may ask the clients two times for extra documents, thus delaying this procedure. The documentation shall include copy of RIF ("Registro de Información Fiscal" or Fiscal Information Register) of both buyer and seller. If there is any authorization by the meetings of the pertinent companies, copies of those authorizing the sale of the immovable must be included. If acting through an attorney-in-fact, a copy of his/her identity card and a copy of the power-of-attorney is required. The sale document is signed by the Registrar under the presence of the parties and two witnesses. Takes place simultaneously with previous procedure. Details – Registering Property in Venezuela, RB – Measure of Quality Answer Score Quality of the land administration index (0-30) 5.5 Reliability of infrastructure index (0-8) 0.0 What is the institution in charge of immovable property registration? Public Registry, a dependent Agency of the Servicio Autónomo de Page 32   Registros y Takes place simultaneously with previous procedure. Doing Business 2018 Venezuela, RB Details – Registering Property in Venezuela, RB – Measure of Quality Answer Score Quality of the land administration index (0-30) 5.5 Reliability of infrastructure index (0-8) 0.0 What is the institution in charge of immovable property registration? Public Registry, a dependent Agency of the Servicio Autónomo de Registros y Notarías ("SAREN") In what format are the majority of title or deed records kept in the largest business city Paper 0.0 —in a paper format or in a computerized format (scanned or fully digital)? Is there an electronic database for checking for encumbrances (liens, mortgages, No 0.0 restrictions and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: El Instituto Geográ co de Venezuela Simón Bolívar ("IGVSB") In what format are the majority of maps of land plots kept in the largest business city— Paper 0.0 in a paper format or in a computerized format (scanned or fully digital)? Is there an electronic database for recording boundaries, checking plans and providing No 0.0 cadastral information (geographic information system)? Is the information recorded by the immovable property registration agency and the Separate 0.0 cadastral or mapping agency kept in a single database, in di erent but linked databases databases or in separate databases? Do the immovable property registration agency and cadastral or mapping agency use No 0.0 the same identi cation number for properties? Transparency of information index (0–6) 1.5 Who is able to obtain information on land ownership at the agency in charge of Freely accessible 1.0 immovable property registration in the largest business city? by anyone Is the list of documents that are required to complete any type of property transaction Yes, in person 0.0 made publicly available–and if so, how? Link for online access: Is the applicable fee schedule for any property transaction at the agency in charge of Yes, in person 0.0 immovable property registration in the largest business city made publicly available– and if so, how? Link for online access: Does the agency in charge of immovable property registration commit to delivering a No 0.0 legally binding document that proves property ownership within a speci c time frame– and if so, how does it communicate the service standard? Page 33   Link for Doing online access: Business 2018 Venezuela, RB Does the agency in charge of immovable property registration commit to delivering a No 0.0 legally binding document that proves property ownership within a speci c time frame– and if so, how does it communicate the service standard? Link for online access: Is there a speci c and separate mechanism for ling complaints about a problem that No 0.0 occurred at the agency in charge of immovable property registration? Contact information: Are there publicly available o cial statistics tracking the number of transactions at the No 0.0 immovable property registration agency? Number of property transfers in the largest business city in 2015: Who is able to consult maps of land plots in the largest business city? Anyone who 0.5 pays the o cial fee Is the applicable fee schedule for accessing maps of land plots made publicly available Yes, in person 0.0 —and if so, how? Link for online access: Does the cadastral or mapping agency commit to delivering an updated map within a Yes, in person 0.0 speci c time frame—and if so, how does it communicate the service standard? Link for online access: Is there a speci c and separate mechanism for ling complaints about a problem that No 0.0 occurred at the cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 0.0 Are all privately held land plots in the economy formally registered at the immovable No 0.0 property registry? Are all privately held land plots in the largest business city formally registered at the No 0.0 immovable property registry? Are all privately held land plots in the economy mapped? No 0.0 Are all privately held land plots in the largest business city mapped? No 0.0 Land dispute resolution index (0–8) 4.0 Does the law require that all property sale transactions be registered at the immovable Yes 1.5 property registry to make them opposable to third parties? Is the system of immovable property registration subject to a state or private Yes 0.5 guarantee? Is there a speci c compensation mechanism to cover for losses incurred by parties who No 0.0 engaged in good faith in a property transaction based on erroneous information certi ed by the immovable property registry? Does the legal system require a control of legality of the documents necessary for a Yes 0.5 Page 34   property transaction (e.g., checking the compliance of contracts with requirements of engaged in good faith in a property transaction based on erroneous information ed by the immovable certi Business Doing property registry? 2018 Venezuela, RB Does the legal system require a control of legality of the documents necessary for a Yes 0.5 property transaction (e.g., checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Notary; Lawyer; Interested Parties. Does the legal system require veri cation of the identity of the parties to a property Yes 0.5 transaction? If yes, who is responsible for verifying the identity of the parties? Registrar; Notary; Lawyer; Interested Parties. Is there a national database to verify the accuracy of identity documents? Yes 1.0 For a standard land dispute between two local businesses over tenure rights of a Tribunales de property worth 50 times gross national income (GNI) per capita and located in the Primera largest business city, what court would be in charge of the case in the rst instance? Instancia en lo civil, mercantil, tránsito y bancario del Area Metropolitana de Caracas How long does it take on average to obtain a decision from the rst-instance court for More than 3 0.0 such a case (without appeal)? years Are there any statistics on the number of land disputes in the rst instance? No 0.0 Number of land disputes in the largest business city in 2015: Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes 0.0 Do married men and married women have equal ownership rights to property? Yes 0.0 Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the e ectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions Rights of borrowers and lenders through through 2 sets of indicators. The depth of credit information index collateral laws (0-10) measures rules and practices a ecting the coverage, scope and Protection of secured creditors’ rights through accessibility of credit information available through a credit registry or a bankruptcy laws (0-2) credit bureau. The strength of legal rights index measures the degree to Depth of credit information index (0–8) which collateral and bankruptcy laws protect the rights of borrowers and Page 35   lenders and thus facilitate lending. For each economy it is first determined Do married men and married women have equal ownership rights to property? Yes 0.0 Doing Business 2018 Venezuela, RB Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the e ectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions Rights of borrowers and lenders through through 2 sets of indicators. The depth of credit information index collateral laws (0-10) measures rules and practices a ecting the coverage, scope and Protection of secured creditors’ rights through accessibility of credit information available through a credit registry or a bankruptcy laws (0-2) credit bureau. The strength of legal rights index measures the degree to Depth of credit information index (0–8) which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined Scope and accessibility of credit information whether a unitary secured transactions system exists. Then two case distributed by credit bureaus and credit scenarios, case A and case B, are used to determine how a nonpossessory registries (0-8) security interest is created, publicized and enforced according to the law. Credit bureau coverage (% of adults) Special emphasis is given to how the collateral registry operates (if Number of individuals and firms listed in largest registration of security interests is possible). The case scenarios involve a credit bureau as a percentage of adult population secured borrower, company ABC, and a secured lender, BizBank. Credit registry coverage (% of adults) In some economies the legal framework for secured transactions will allow Number of individuals and firms listed in credit only case A or case B (not both) to apply. Both cases examine the same set registry as a percentage of adult population of legal provisions relating to the use of movable collateral. Several assumptions about the secured borrower (ABC) and lender (BizBank) are used: - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. Latin America & OECD high Indicator Venezuela, RB Caribbean income Overall Best Performer Strength of legal rights index (0-12) 1 5.3 6.0 12.00 (4 Economies) Depth of credit information index (0-8) 7 4.8 6.6 8.00 (34 Economies) Page 36   Credit registry coverage (% of adults) 0.0 14.0 18.3 100.00 (3 Economies) possible). ABC keeps ownership and possession of the assets. Doing Business 2018 Venezuela, RB Latin America & OECD high Indicator Venezuela, RB Caribbean income Overall Best Performer Strength of legal rights index (0-12) 1 5.3 6.0 12.00 (4 Economies) Depth of credit information index (0-8) 7 4.8 6.6 8.00 (34 Economies) Credit registry coverage (% of adults) 0.0 14.0 18.3 100.00 (3 Economies) Credit bureau coverage (% of adults) 27.4 43.1 63.7 100.00 (23 Economies) Figure – Getting Credit in Venezuela and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 90.00: Mexico (Rank: 6) 55.00: Argentina (Rank: 77) 50.94: Regional Average (Latin America & Caribbean) 45.00: Brazil (Rank: 105) 40.00: Venezuela, RB (Rank: 122) 35.00: Bolivia (Rank: 133) Note: The ranking of economies on the ease of getting credit is determined by sorting their distance to frontier scores for getting credit. These scores are the distance to frontier score for the sum of the strength of legal rights index and the depth of credit information index. Figure – Legal Rights in Venezuela, RB and comparator economies 12 10 10 8 Index score 6 5.3 4 3 2 2 1 0 0 Venezuela, RB Argentina Bolivia Brazil Mexico Latin America & Caribbean Details – Legal Rights in Venezuela, RB Strength of legal rights index (0-12) 1 Does an integrated or uni ed legal framework for secured transactions that extends to the creation, publicity and No enforcement of functional equivalents to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without No requiring a speci c description of collateral? Page 37   Venezuela, RB Argentina Bolivia Brazil Mexico Latin America & Caribbean Doing Business 2018 Venezuela, RB Details – Legal Rights in Venezuela, RB Strength of legal rights index (0-12) 1 Does an integrated or uni ed legal framework for secured transactions that extends to the creation, publicity and No enforcement of functional equivalents to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without No requiring a speci c description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring Yes a speci c description of collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds No or replacements of the original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and No obligations be secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is uni ed geographically No and by asset type, with an electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? No Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be No performed online by any interested third party? Are secured creditors paid rst (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency No procedure? Are secured creditors paid rst (i.e. before tax claims and employee claims) when a business is liquidated? No Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised No reorganization procedure? Does the law protect secured creditors’ rights by providing clear grounds for relief from the stay and/or sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law No allow the secured creditor to sell the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Venezuela, RB and comparator economies 10 8 8 8 7 7 7 Index score 6 4.8 4 2 0 Venezuela, RB Argentina Bolivia Brazil Mexico Latin America & Caribbean Details – Credit Information in Venezuela, RB Page 38   0 Venezuela, Doing Business 2018 RB Argentina Venezuela, RB Bolivia Brazil Mexico Latin America & Caribbean Details – Credit Information in Venezuela, RB Credit Credit Depth of credit information index (0-8) bureau registry Score Are data on both firms and individuals distributed? Yes No 1 Are both positive and negative credit data distributed? Yes No 1 Are data from retailers or utility companies - in addition to data from banks and financial institutions - No No 0 distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries that distribute more Yes No 1 than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? Yes No 1 By law, do borrowers have the right to access their data in the credit bureau or credit registry? Yes No 1 Can banks and financial institutions access borrowers’ credit information online (for example, Yes No 1 through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help banks and financial Yes No 1 institutions assess the creditworthiness of borrowers? Score ("yes" to either public bureau or private registry) 7 Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 5,626,159 0 Number of firms 65,728 0 Total 5,691,887 0 Percentage of adult population 27.4 0.0 Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Extent of disclosure index (0–10): Review and To make the data comparable across economies, a case study uses several approval requirements for related-party assumptions about the business and the transaction. transactions; Disclosure requirements for related-party transactions The business (Buyer): Extent of director liability index (0–10): Ability of - Is a publicly traded corporation listed on the economy’s most important minority shareholders to sue and hold interested stock exchange. If the number of publicly traded companies listed on that directors liable for prejudicial related-party exchange is less than 10, or if there is no stock exchange in the economy, it is assumed that Buyer is a large private company with multiple Page 39   transactions; Available legal remedies (damages, Percentage of adult population 27.4 0.0 Doing Business 2018 Venezuela, RB Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Extent of disclosure index (0–10): Review and To make the data comparable across economies, a case study uses several approval requirements for related-party assumptions about the business and the transaction. transactions; Disclosure requirements for related-party transactions The business (Buyer): Extent of director liability index (0–10): Ability of - Is a publicly traded corporation listed on the economy’s most important minority shareholders to sue and hold interested stock exchange. If the number of publicly traded companies listed on that directors liable for prejudicial related-party exchange is less than 10, or if there is no stock exchange in the economy, it transactions; Available legal remedies (damages, is assumed that Buyer is a large private company with multiple disgorgement of profits, fines, imprisonment, shareholders. rescission of the transaction) - Has a board of directors and a chief executive o cer (CEO) who may legally act on behalf of Buyer where permitted, even if this is not speci cally Ease of shareholder suits index (0–10): Access to required by law. internal corporate documents; Evidence - Has a supervisory board (applicable to economies with a two-tier board obtainable during trial and allocation of legal system) on which 60% of the shareholder-elected members have been expenses appointed by Mr. James, who is Buyer’s controlling shareholder and a Extent of conflict of interest regulation index member of Buyer’s board of directors. (0–10): Simple average of the extent of disclosure, - Has not adopted any bylaws or articles of association that di er from extent of director liability and ease of default minimum standards and does not follow any nonmandatory codes, shareholder indices principles, recommendations or guidelines relating to corporate Extent of shareholder rights index (0-10): governance. Shareholders’ rights and role in major corporate - Is a manufacturing company with its own distribution network. decisions Extent of ownership and control index (0-10): The transaction involves the following details: Governance safeguards protecting shareholders - Mr. James owns 60% of Buyer and elected two directors to Buyer’s ve- from undue board control and entrenchment member board. Extent of corporate transparency index (0-10): - Mr. James also owns 90% of Seller, a company that operates a chain of Corporate transparency on ownership stakes, retail hardware stores. Seller recently closed a large number of its stores. compensation, audits and financial prospects - Mr. James proposes that Buyer purchase Seller’s unused eet of trucks to expand Buyer’s distribution of its food products, a proposal to which Buyer Extent of shareholder governance index (0–10): agrees. The price is equal to 10% of Buyer’s assets and is higher than the Simple average of the extent of shareholders market value. rights, extent of ownership and control and - The proposed transaction is part of the company’s ordinary course of extent of corporate transparency indices business and is not outside the authority of the company. Strength of minority investor protection index - Buyer enters into the transaction. All required approvals are obtained, (0–10): Simple average of the extent of conflict of and all required disclosures made (that is, the transaction is not interest regulation and extent of shareholder fraudulent). governance indices - The transaction causes damages to Buyer. Shareholders sue Mr. James and the other parties that approved the transaction. Latin America & OECD high Indicator Venezuela, RB Caribbean income Overall Best Performer Extent of conflict of interest regulation index (0- 2.7 5.3 6.4 9.3 (New Zealand) 10) Extent of shareholder governance index (0-10) 2.7 4.1 6.4 Page 40   9.00 (Kazakhstan) and the other parties that approved the transaction. Doing Business 2018 Venezuela, RB Latin America & OECD high Indicator Venezuela, RB Caribbean income Overall Best Performer Extent of conflict of interest regulation index (0- 2.7 5.3 6.4 9.3 (New Zealand) 10) Extent of shareholder governance index (0-10) 2.7 4.1 6.4 9.00 (Kazakhstan) Figure – Protecting Minority Investors in Venezuela and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 63.33: Argentina (Rank: 43) 63.33: Brazil (Rank: 43) 58.33: Mexico (Rank: 62) 47.24: Regional Average (Latin America & Caribbean) 40.00: Bolivia (Rank: 146) 26.67: Venezuela, RB (Rank: 177) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their distance to frontier scores for protecting minority investors. These scores are the simple average of the distance to frontier scores for the extent of con ict of interest regulation index and the extent of shareholder governance index. Figure – Protecting Minority Investors in Venezuela, RB and comparator economies – Measure of Quality the República Bolivariana de Venezuela 3 2 3 3 2 3 Argentina 7 2 7 7 9 6 Bolivia 4 5 1 2 6 6 Brazil 8 8 5 6 7 4 Mexico 4 5 8 6 7 5 OECD high income 7.3 5.6 6.5 5.2 6.3 7.4 Latin America & Caribbean 4.1 5.4 4.4 3.4 5.6 6.5 0 5 10 15 20 25 30 35 40 Sub-Indicator Score Extent of corporate transparency index (0­10) Extent of director liability index (0­10) Extent of disclosure index (0­10) Extent of ownership and control index (0­10) Extent of shareholder rights index (0­10) Ease of shareholder suits index (0­10) Details – Protecting Minority Investors in Venezuela, RB – Measure of Quality Answer Score Page 41   Extent of ownership and control index (0­10) Extent of shareholder rights index (0­10) Ease of shareholder suits index (0­10) Doing Business 2018 Venezuela, RB Details – Protecting Minority Investors in Venezuela, RB – Measure of Quality Answer Score Extent of con ict of interest regulation index (0-10) 2.7 Extent of disclosure index (0-10) 3 Which corporate body is legally su cient to approve the Buyer-Seller transaction? (0-3) Board of 2.0 directors excluding interested members Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0 Must Mr. James disclose his con ict of interest to the board of directors? (0-2) Existence of a 1.0 con ict without any speci cs Must Buyer disclose the transaction in published periodic lings (annual reports)? (0-2) No disclosure 0.0 obligation Must Buyer immediately disclose the transaction to the public and/or shareholders? (0- No disclosure 0.0 2) obligation Extent of director liability index (0-10) 2 Can shareholders representing 10% of Buyer's share capital sue directly or derivatively Yes 1.0 for the damage the transaction caused to Buyer? (0-1) Can shareholders hold the interested director liable for the damage the transaction Not liable 0.0 caused to Buyer? (0-2) Can shareholders hold the other directors liable for the damage the transaction caused Liable if negligent 1.0 to Buyer (0-2) Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by No 0.0 shareholders? (0-1) Must Mr. James repay pro ts made from the transaction upon a successful claim by No 0.0 shareholders? (0-1) Is Mr. James disquali ed or ned and imprisoned upon a successful claim by No 0.0 shareholders? (0-1) Can a court void the transaction upon a successful claim by shareholders? (0-2) Only in case of 0.0 fraud or bad faith Ease of shareholder suits index (0-10) 3 Before suing can shareholders representing 10% of Buyer's share capital inspect the No 0.0 transaction documents? (0-1) Can the plainti obtain any documents from the defendant and witnesses at trial? (0-3) No 0.0 Can the plainti request categories of documents from the defendant without No 0.0 identifying speci c ones? (0-1) Page 42   Can the plainti directly question the defendant and witnesses at trial? (0-2) Yes 2.0 Can the Doing obtain any plainti 2018 Business documentsRB Venezuela, from the defendant and witnesses at trial? (0-3) No 0.0 Can the plainti request categories of documents from the defendant without No 0.0 identifying speci c ones? (0-1) Can the plainti directly question the defendant and witnesses at trial? (0-2) Yes 2.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) No 0.0 Can shareholder plainti s recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-10) 2.7 Extent of shareholder rights index (0-10) 2 Does the sale of 51% of Buyer's assets require shareholder approval? No 0.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of No 0.0 shareholders? Must Buyer obtain its shareholders’ approval every time it issues new shares? Yes 1.0 Do shareholders automatically receive preemption rights every time Buyer issues new No 0.0 shares? Must shareholders approve the election and dismissal of the external auditor? No 0.0 Are changes to the rights of a class of shares only possible if the holders of the a ected No 0.0 shares approve? Assuming that Buyer is a limited company, does the sale of 51% of its assets require No 0.0 member approval? Assuming that Buyer is a limited company, can members representing 10% call for a No 0.0 meeting of members? Assuming that Buyer is a limited company, must all members consent to add a new No 0.0 member? Assuming that Buyer is a limited company, must a member rst o er to sell their Yes 1.0 interest to the existing members before they can sell to non-members? Extent of ownership and control index (0-10) 3 Is it forbidden to appoint the same individual as CEO and chair of the board of No 0.0 directors? Must the board of directors include independent and nonexecutive board members? No 0.0 Can shareholders remove members of the board of directors without cause before the Yes 1.0 end of their term? Must the board of directors include a separate audit committee exclusively comprising Yes 1.0 board members? Must a potential acquirer make a tender o er to all shareholders upon acquiring 50% No 0.0 of Buyer? Must Buyer pay declared dividends within a maximum period set by law? No 0.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? No 0.0 Assuming that Buyer is a limited company, must Buyer have a mechanism to resolve Yes 1.0 Page 43   Buyer pay declared MustBusiness Doing RBa maximum period set by law? dividends within 2018 Venezuela, No 0.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? No 0.0 Assuming that Buyer is a limited company, must Buyer have a mechanism to resolve Yes 1.0 disagreements among members? Assuming that Buyer is a limited company, must a potential acquirer make a tender No 0.0 o er to all shareholders upon acquiring 50% of Buyer? Assuming that Buyer is a limited company, must Buyer distribute pro ts within a No 0.0 maximum period set by law? Extent of corporate transparency index (0-10) 3 Must Buyer disclose direct and indirect bene cial ownership stakes representing 5%? No 0.0 Must Buyer disclose information about board members’ primary employment and No 0.0 directorships in other companies? Must Buyer disclose the compensation of individual managers? No 0.0 Must a detailed notice of general meeting be sent 21 days before the meeting? No 0.0 Can shareholders representing 5% of Buyer’s share capital put items on the general No 0.0 meeting agenda? Must Buyer's annual nancial statements be audited by an external auditor? No 0.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Assuming that Buyer is a limited company, must members meet at least once a year? Yes 1.0 Assuming that Buyer is a limited company, can members representing 5% put items on Yes 1.0 the meeting agenda? Assuming that Buyer is a limited company, must Buyer's annual nancial statements be No 0.0 audited by an external auditor? Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as measures the administrative burden in paying taxes and contributions. The most recent round of data collection for the project was completed on June 30, 2017 covering for the Paying Taxes indicator calendar year 2016 (January 1, 2016 – December 31, 2016). Last year (Doing Business 2017) the scope of data collection was expanded to better understand the overall tax environment in an economy. The questionnaire was expanded to include new questions on post- ling processes: VAT refund and tax audit. The data shows where post ling processes and practices work e ciently and what drives the di erences in the overall tax compliance cost across economies. The new section covers both the legal framework and the administrative burden on businesses to comply with post ling processes. See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in Using a case scenario, Doing Business records taxes and mandatory 2016 (number per year adjusted for electronic and contributions a medium size company must pay in a year, and measures joint ling and payment) the administrative burden of paying taxes, contributions and dealing with post ling processes. Information is also compiled on frequency of ling Total number of taxes and contributions paid, Page 44   and payments, time taken to comply with tax laws, time taken to comply including consumption taxes (value added tax, Assuming that Buyer is a limited company, must Buyer's annual nancial statements be No 0.0 audited by an external auditor? Doing Business 2018 Venezuela, RB Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as measures the administrative burden in paying taxes and contributions. The most recent round of data collection for the project was completed on June 30, 2017 covering for the Paying Taxes indicator calendar year 2016 (January 1, 2016 – December 31, 2016). Last year (Doing Business 2017) the scope of data collection was expanded to better understand the overall tax environment in an economy. The questionnaire was expanded to include new questions on post- ling processes: VAT refund and tax audit. The data shows where post ling processes and practices work e ciently and what drives the di erences in the overall tax compliance cost across economies. The new section covers both the legal framework and the administrative burden on businesses to comply with post ling processes. See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in Using a case scenario, Doing Business records taxes and mandatory 2016 (number per year adjusted for electronic and contributions a medium size company must pay in a year, and measures joint ling and payment) the administrative burden of paying taxes, contributions and dealing with post ling processes. Information is also compiled on frequency of ling Total number of taxes and contributions paid, and payments, time taken to comply with tax laws, time taken to comply including consumption taxes (value added tax, with the requirements of post ling processes and time waiting. sales tax or goods and service tax) Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: Time required to comply with 3 major taxes - TaxpayerCo is a medium-size business that started operations on January (hours per year) 1, 2015. It produces ceramic flowerpots and sells them at retail. All taxes Collecting information, computing tax payable and contributions recorded are paid in the second year of operation Completing tax return, filing with agencies (calendar year 2016). Taxes and mandatory contributions are measured at all levels of government. Arranging payment or withholding Preparing separate tax accounting books, if The VAT refund process: required - In June 2016, TaxpayerCo. makes a large capital purchase: the value of the Total tax and contribution rate (% of pro t before machine is 65 times income per capita of the economy. Sales are equally all taxes) spread per month (1,050 times income per capita divided by 12) and cost of goods sold are equally expensed per month (875 times income per Profit or corporate income tax capita divided by 12). The machinery seller is registered for VAT and excess Social contributions, labor taxes paid by input VAT incurred in June will be fully recovered after four consecutive employer months if the VAT rate is the same for inputs, sales and the machine and Property and property transfer taxes the tax reporting period is every month. Input VAT will exceed Output VAT Dividend, capital gains, financial transactions in June 2016. taxes The corporate income tax audit process: Waste collection, vehicle, road and other taxes - An error in calculation of income tax liability (for example, use of incorrect Post ling Index tax depreciation rates, or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income Time to comply with a VAT refund tax underpayment. TaxpayerCo. discovered the error and voluntarily Time to receive a VAT refund noti ed the tax authority. The value of the underpaid income tax liability is Time to comply with a corporate income tax audit 5% of the corporate income tax liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax Time to complete a corporate income tax audit return, but within the tax assessment period. Latin America & OECD high Indicator Venezuela, RB Caribbean income Overall Best Performer Payments (number per year) 70 28.0 10.9 3 (Hong Kong SAR, China) Page 45   return, but within the tax assessment period. Doing Business 2018 Venezuela, RB Latin America & OECD high Indicator Venezuela, RB Caribbean income Overall Best Performer Payments (number per year) 70 28.0 10.9 3 (Hong Kong SAR, China) Time (hours per year) 792 332.1 160.7 55 (Luxembourg) Total tax and contribution rate (% of profit) 65.0 46.6 40.1 18.47% (32 Economies) Postfiling index (0-100) 19.72 47.50 83.45 99.38 (Estonia) Figure – Paying Taxes in Venezuela and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 67.01: Mexico (Rank: 115) 60.16: Regional Average (Latin America & Caribbean) 49.34: Argentina (Rank: 169) 32.97: Brazil (Rank: 184) 21.62: Bolivia (Rank: 186) 15.18: Venezuela, RB (Rank: 189) Note: The ranking of economies on the ease of paying taxes is determined by sorting their distance to frontier scores on the ease of paying taxes. These scores are the simple average of the distance to frontier scores for each of the four component indicators – number of tax payments. time, total tax rate and post ling index – with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax rate. The nonlinear distance to frontier for the total tax rate is equal to the distance to frontier for the total tax rate to the power of 0.8. The threshold is de ned as the total tax rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax rate below this threshold receive the same score as the economy at the threshold. Figure – Paying Taxes in Venezuela, RB and comparator economies – Measure of Quality 60 50.00 50 47.94 47.50 40.51 40 Index score 30 19.72 20 10 7.80 0 Venezuela, RB Argentina Bolivia Brazil Mexico Latin America & Caribbean Details – Paying Taxes in Venezuela, RB Total tax and contribution Tax or mandatory Payments Notes on Time rate (% of Notes Page 46   contribution (number) Payments (hours) Statutory tax rate Tax base profit) on TTR Doing Business 2018 Venezuela, RB Figure – Paying Taxes in Venezuela, RB and comparator economies – Measure of Quality 60 50.00 50 47.94 47.50 40.51 40 Index score 30 19.72 20 10 7.80 0 Venezuela, RB Argentina Bolivia Brazil Mexico Latin America & Caribbean Details – Paying Taxes in Venezuela, RB Total tax and contribution Tax or mandatory Payments Notes on Time rate (% of Notes contribution (number) Payments (hours) Statutory tax rate Tax base profit) on TTR Municipal business 1 1.6% turnover 28.28 tax Employer paid - 12 288 10% gross 11.28 Social security salaries contributions Science technology 1 0.5% annual gross 8.84 and innovation tax income Corporate income 13 120 15%-34% (progressive scale) taxable 8.18 tax income Employer paid - 4 2% gross 2.26 Training tax salaries Employer paid - 0 jointly 2% gross 2.26 Unemployment salaries relief benefit contribution Employer paid - 12 2% gross 2.26 Housing salaries contribution Anti-drug tax 1 1% annual 1.65 operational earnings Property tax 12 0.48% building 0.00 value Stamp duty 1 various rates 0.00 small amount Value added tax 12 384 12%. There is also an value added 0.00 not Page 47   (VAT) additional rate of 10% to included Stamp duty 1 various rates 0.00 small Doing Business 2018 Venezuela, RB amount Value added tax 12 384 12%. There is also an value added 0.00 not (VAT) additional rate of 10% to included luxury items. Finally, there is a reduced rate of 8% to preferencial items Fuel tax 1 30%-50% fuel 0.00 consumption Employee paid - 0 jointly 1% gross 0.00 withheld Housing salaries contribution Employee paid - 0 jointly 5.5% gross 0.00 withheld Social security salaries contributions Employee paid - 0 jointly 0.5% gross 0.00 withheld Unemployment salaries relief benefit Totals 70 792 65.0 Details – Paying Taxes in Venezuela, RB – Tax by Type Taxes by type Answer Profit tax (% of profit) 9.8 Labor tax and contributions (% of profit) 18.0 Other taxes (% of profit) 37.1 Details – Paying Taxes in Venezuela, RB – Measure of Quality Answer Score Post ling index (0-100) 19.72 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? No Restrictions on VAT refund process No VAT refund mechanism Percentage of cases exposed to a VAT audit (%) Not applicable Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) No VAT refund 0 per case study scenario Page 48   Is there Doing 2018carry a mandatory Business forward period? Venezuela, RB No Time to comply with VAT refund (hours) No VAT refund 0 per case study scenario Time to obtain a VAT refund (weeks) No VAT refund 0 per case study scenario Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 25% - 49% Time to comply with a corporate income tax audit (hours) 13.0 78.9 Time to complete a corporate income tax audit (weeks) 32.3 0 Notes: Names of taxes have been standardized. For instance income tax, pro t tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The post ling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax audit and time to complete a corporate income tax audit. N/A = Not applicable. Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tari s) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. Given the importance of trade digitalization, in Doing Business 2018, the Trading across Borders questionnaire included research questions on the availability and status of implementation of Electronic Data Interchange (EDI) and Single Window (SW) systems. With this information, Doing Business built a comprehensive dataset on the adoption and level of sophistication of electronic platforms in 190 economies. These data are not used to compute the distance to frontier score or ranking of the ease of doing business. The new dataset on EDI and SW systems is available here. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: Obtaining, preparing and submitting documents during transport, clearance, inspections and port Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 or border handling in origin economy days are recorded as 22×24=528 hours). If customs clearance takes 7.5 Obtaining, preparing and submitting documents hours, the data are recorded as is. Alternatively, suppose documents are required by destination economy and any transit submitted to a customs agency at 8:00a.m., are processed overnight and economies can be picked up at 8:00a.m. the next day. The time for customs clearance Covers all documents required by law and in would be recorded as 24 hours because the actual procedure took 24 practice, including electronic submissions of hours. information Border compliance Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the costs recorded. Costs are reported in U.S. dollars. Customs clearance and inspections Contributors are asked to convert local currency into U.S. dollars based on Inspections by other agencies (if applied to more the exchange rate prevailing on the day they answer the questionnaire. than 20% of shipments) Page 49   Contributors are private sector experts in international trade logistics and a corporate income tax audit and time to complete a corporate income tax audit. N/A = Not applicable. Doing Business 2018 Venezuela, RB Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tari s) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. Given the importance of trade digitalization, in Doing Business 2018, the Trading across Borders questionnaire included research questions on the availability and status of implementation of Electronic Data Interchange (EDI) and Single Window (SW) systems. With this information, Doing Business built a comprehensive dataset on the adoption and level of sophistication of electronic platforms in 190 economies. These data are not used to compute the distance to frontier score or ranking of the ease of doing business. The new dataset on EDI and SW systems is available here. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: Obtaining, preparing and submitting documents during transport, clearance, inspections and port Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 or border handling in origin economy days are recorded as 22×24=528 hours). If customs clearance takes 7.5 Obtaining, preparing and submitting documents hours, the data are recorded as is. Alternatively, suppose documents are required by destination economy and any transit submitted to a customs agency at 8:00a.m., are processed overnight and economies can be picked up at 8:00a.m. the next day. The time for customs clearance Covers all documents required by law and in would be recorded as 24 hours because the actual procedure took 24 practice, including electronic submissions of hours. information Border compliance Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the costs recorded. Costs are reported in U.S. dollars. Customs clearance and inspections Contributors are asked to convert local currency into U.S. dollars based on Inspections by other agencies (if applied to more the exchange rate prevailing on the day they answer the questionnaire. than 20% of shipments) Contributors are private sector experts in international trade logistics and Handling and inspections that take place at the are informed about exchange rates. economy’s port or border Assumptions of the case study: - For all 190 economies covered by Doing Domestic transport Business, it is assumed a shipment is in a warehouse in the largest Loading or unloading of the shipment at the business city of the exporting economy and travels to a warehouse in the warehouse or port/border largest business city of the importing economy. - It is assumed each Transport between warehouse and port/border economy imports 15 metric tons of containerized auto parts (HS 8708) from its natural import partner—the economy from which it imports the Traffic delays and road police checks while largest value (price times quantity) of auto parts. It is assumed each shipment is en route economy exports the product of its comparative advantage (de ned by the largest export value) to its natural export partner—the economy that is the largest purchaser of this product. Shipment value is assumed to be $50,000. - The mode of transport is the one most widely used for the chosen export or import product and the trading partner, as is the seaport, or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport, airport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 50   of agriculture or industry, national security agencies and any other Doing Business 2018 Venezuela, RB government authorities. Latin America & OECD high Indicator Venezuela, RB Caribbean income Overall Best Performer Time to export: Border compliance (hours) 288 62.5 12.7 0 (17 Economies) Cost to export: Border compliance (USD) 1250 526.5 149.9 0.00 (19 Economies) Time to export: Documentary compliance 528 53.3 2.4 1.0 (25 Economies) (hours) Cost to export: Documentary compliance (USD) 375 110.4 35.4 0.00 (19 Economies) Time to import: Border compliance (hours) 240 64.4 8.7 0.00 (21 Economies) Cost to import: Border compliance (USD) 1500 684.0 111.6 0.00 (27 Economies) Time to import: Documentary compliance 1090 79.9 3.5 1.0 (30 Economies) (hours) Cost to import: Documentary compliance (USD) 400 119.5 25.6 0.00 (30 Economies) Figure – Trading across Borders in Venezuela and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 82.09: Mexico (Rank: 63) 71.59: Bolivia (Rank: 89) 7.93: Venezuela, RB (Rank: 187) 68.71: Regional Average (Latin America & Caribbean) 65.36: Argentina (Rank: 116) 59.78: Brazil (Rank: 139) Note: The ranking of economies on the ease of trading across borders is determined by sorting their distance to frontier scores for trading across borders. These scores are the simple average of the distance to frontier scores for the time and cost for documentary compliance and border compliance to export and import (domestic transport is not used for calculating the ranking). Figure – Trading across Borders in Venezuela, RB – Time and Cost Time Cost 1200 1500 1090 1600 1400 1000 1250 1200 800 Time (hours) Cost (USD) 1000 600 528 800 600 400 400 288 375 240 400 200 200 0 0 Export - Border Compliance Export - Documentary Compliance Import - Border Compliance Import - Documentary Compliance Page 51   Doing Business 2018 Venezuela, RB Figure – Trading across Borders in Venezuela, RB – Time and Cost Time Cost 1200 1500 1090 1600 1400 1000 1250 1200 800 Time (hours) Cost (USD) 1000 600 528 800 600 400 400 288 375 240 400 200 200 0 0 Export - Border Compliance Export - Documentary Compliance Import - Border Compliance Import - Documentary Compliance Details – Trading across Borders in Venezuela, RB Characteristics Export Import Product HS 72 : Iron and steel HS 8708: Parts and accessories of motor vehicles Trade partner Colombia United States Border Puerto Cabello port Puerto Cabello port Distance (km) 221 221 Domestic transport time (hours) 5 5 Domestic transport cost (USD) 1375 1375 Details – Trading across Borders in Venezuela, RB – Components of Border Compliance Time to Complete Associated Costs (hours) (USD) Export: Clearance and inspections required by customs authorities 168.0 450.0 Export: Clearance and inspections required by agencies other than customs 0.0 0.0 Export: Port or border handling 288.0 800.0 Import: Clearance and inspections required by customs authorities 240.0 700.0 Import: Clearance and inspections required by agencies other than customs 0.0 0.0 Import: Port or border handling 240.0 800.0 Details – Trading across Borders in Venezuela, RB – Trade Documents Export Import Bill of lading Bill of lading Commercial invoice Commercial invoice Page 52   Domestic transport cost (USD) 1375 1375 Doing Business 2018 Venezuela, RB Details – Trading across Borders in Venezuela, RB – Components of Border Compliance Time to Complete Associated Costs (hours) (USD) Export: Clearance and inspections required by customs authorities 168.0 450.0 Export: Clearance and inspections required by agencies other than customs 0.0 0.0 Export: Port or border handling 288.0 800.0 Import: Clearance and inspections required by customs authorities 240.0 700.0 Import: Clearance and inspections required by agencies other than customs 0.0 0.0 Import: Port or border handling 240.0 800.0 Details – Trading across Borders in Venezuela, RB – Trade Documents Export Import Bill of lading Bill of lading Commercial invoice Commercial invoice Customs Import Declaration Customs Import Declaration Equipment interchange receipt Import license Export license Technical Standards Certificate Foreign exchange registration “Autorizacion de Adquisicion de Divisas” National Guard inspection certificate National Guard inspection certificate Cargo Release Order Packing list Certificate of fumigation SOLAS certificate Terminal handling receipts SOLAS certificate Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local rst-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and e ciency in the court system. The most recent round of data collection was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the The dispute in the case study involves the breach of a sales contract courts (calendar days) between 2 domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes Time to file and serve the case the case from simple debt enforcement. Time for trial and to obtain the judgment To make the data comparable across economies, Doing Business uses Page 53   Time to enforce the judgment several assumptions about the case: SOLAS certificate Doing Business 2018 Venezuela, RB Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local rst-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and e ciency in the court system. The most recent round of data collection was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the The dispute in the case study involves the breach of a sales contract courts (calendar days) between 2 domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes Time to file and serve the case the case from simple debt enforcement. Time for trial and to obtain the judgment To make the data comparable across economies, Doing Business uses Time to enforce the judgment several assumptions about the case: Cost required to enforce a contract through the - The dispute concerns a lawful transaction between two businesses (Seller courts (% of claim) and Buyer), both located in the economy’s largest business city. For 11 Attorney fees economies the data are also collected for the second largest business city. - The buyer orders custom-made goods, then fails to pay. Court fees - The value of the dispute is 200% of the income per capita or the Enforcement fees equivalent in local currency of USD 5,000, whichever is greater. Quality of judicial processes index (0-18) - The seller sues the buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000. Court structure and proceedings (-1-5) - The seller requests a pretrial attachment to secure the claim. Case management (0-6) - The dispute on the quality of the goods requires an expert opinion. Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. Alternative dispute resolution (0-3) - The seller enforces the judgment through a public sale of the buyer’s movable assets. Standardized Case Claim value VEF 151,852.00 Court name Caracas Municipal Court City Covered Caracas Latin America & OECD high Indicator Venezuela, RB Caribbean income Overall Best Performer Time (days) 720 767.1 577.8 164.00 (Singapore) Cost (% of claim value) 43.7 31.4 21.5 9.00 (Iceland) Quality of judicial processes index (0-18) 7.0 8.4 11.0 15.50 (Australia) Figure – Enforcing Contracts in Venezuela and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 67.01: Mexico (Rank: 41) 66.00: Brazil (Rank: 47) 55.66: Argentina (Rank: 102) Page 54   of judicial processes Quality Business Doing index (0-18) RB 2018 Venezuela, 7.0 8.4 11.0 15.50 (Australia) Figure – Enforcing Contracts in Venezuela and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 67.01: Mexico (Rank: 41) 66.00: Brazil (Rank: 47) 55.66: Argentina (Rank: 102) 54.65: Bolivia (Rank: 109) 53.13: Regional Average (Latin America & Caribbean) 46.89: Venezuela, RB (Rank: 147) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their distance to frontier scores for enforcing contracts. These scores are the simple average of the distance to frontier scores for each of the component indicators. Figure – Enforcing Contracts in Venezuela, RB – Time and Cost Time Cost 1200 50 43.7 995 1000 Cost (% of claim value) 40 767.1 31.4 33.0 800 731 720 Time (days) 30 591 25.0 577.8 600 22.5 22.0 21.5 20 400 341 10 200 0 0 Argentina Bolivia Brazil Latin America & Mexico OECD high income Venezuela, RB Caribbean Figure – Enforcing Contracts in Venezuela, RB and comparator economies – Measure of Quality the República Bolivariana de Venezuela 2 0.5 1 3.5 Argentina 2 4 1 4.5 Bolivia 2.5 1.5 0 1.5 Brazil 3 3 3 4.1 Mexico 2.5 3.3 0.5 3.8 OECD high income 2.5 2.9 2 3.6 Latin America & Caribbean 2.4 2 0.9 3.5 0 2 4 6 8 10 12 Page 55   14 Argentina Bolivia Brazil Latin America & Mexico OECD high income Venezuela, RB Caribbean Doing Business 2018 Venezuela, RB Figure – Enforcing Contracts in Venezuela, RB and comparator economies – Measure of Quality the República Bolivariana de Venezuela 2 0.5 1 3.5 Argentina 2 4 1 4.5 Bolivia 2.5 1.5 0 1.5 Brazil 3 3 3 4.1 Mexico 2.5 3.3 0.5 3.8 OECD high income 2.5 2.9 2 3.6 Latin America & Caribbean 2.4 2 0.9 3.5 0 2 4 6 8 10 12 14 Sub-Indicator Score Alternative dispute resolution (0­3) Case management (0­6) Court automation (0­4) Court structure and proceedings (­1­5) Details – Enforcing Contracts in Venezuela, RB Indicator Time (days) 720 Filing and service 150 Trial and judgment 420 Enforcement of judgment 150 Cost (% of claim value) 43.7 Attorney fees 21.5 Court fees 7.2 Enforcement fees 15 Quality of judicial processes index (0-18) 7.0 Court structure and proceedings (-1-5) 3.5 Case management (0-6) 0.5 Court automation (0-4) 1.0 Alternative dispute resolution (0-3) 2.0 Details – Enforcing Contracts in Venezuela, RB – Measure of Quality Page 56   Alternative dispute resolution (0-3) 2.0 Doing Business 2018 Venezuela, RB Details – Enforcing Contracts in Venezuela, RB – Measure of Quality Answer Score Quality of judicial processes index (0-18) 7.0 Court structure and proceedings (-1-5) 3.5 1. Is there a court or division of a court dedicated solely to hearing commercial cases? No 0.0 2. Small claims court 1.5 2.a. Is there a small claims court or a fast-track procedure for small claims? Yes 2.b. If yes, is self-representation allowed? Yes 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, automatic 1.0 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 0.5 1. Time standards 0.5 1.a. Are there laws setting overall time standards for key court events in a civil case? Yes 1.b. If yes, are the time standards set for at least three court events? Yes 1.c. Are these time standards respected in more than 50% of cases? No 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that can be No granted? 2.b. Are adjournments limited to unforeseen and exceptional circumstances? No 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a. 3. Can two of the following four reports be generated about the competent court: (i) No 0.0 time to disposition report; (ii) clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the No 0.0 competent court? 5. Are there any electronic case management tools in place within the competent court No 0.0 for use by judges? 6. Are there any electronic case management tools in place within the competent court No 0.0 for use by lawyers? Court automation (0-4) 1.0 1. Can the initial complaint be led electronically through a dedicated platform within No 0.0 the competent court? 2. Is it possible to carry out service of process electronically for claims led before the No 0.0 competent court? Page 57   1. Can the initial complaint be led electronically through a dedicated platform within No 0.0 Businesscourt? the competent Doing 2018 Venezuela, RB 2. Is it possible to carry out service of process electronically for claims led before the No 0.0 competent court? 3. Can court fees be paid electronically within the competent court? No 0.0 4. Publication of judgments 1.0 4.a Are judgments rendered in commercial cases at all levels made available to the Yes general public through publication in o cial gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme Yes court level made available to the general public through publication in o cial gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 2.0 1. Arbitration 1.5 1.a. Is domestic commercial arbitration governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public No order or public policy—that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes 2. Mediation/Conciliation 0.5 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or No consolidated chapter or section of the applicable code of civil procedure encompassing substantially all their aspects? 2.c. Are there nancial incentives for parties to attempt mediation or conciliation (i.e., No if mediation or conciliation is successful, a refund of court ling fees, income tax credits or the like)? Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are Measured in calendar years used: Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 Cost required to recover debt (% of debtor’s estate) suppliers. The hotel experiences nancial di culties. Page 58   Measured as percentage of estate value - The value of the hotel is 100% of the income per capita or the equivalent if mediation or conciliation is successful, a refund of court ling fees, income tax credits or the like)? Doing Business 2018 Venezuela, RB Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are Measured in calendar years used: Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 Cost required to recover debt (% of debtor’s estate) suppliers. The hotel experiences nancial di culties. Measured as percentage of estate value - The value of the hotel is 100% of the income per capita or the equivalent Court fees in local currency of USD 200,000, whichever is greater. - The hotel has a loan from a domestic bank, secured by a mortgage over Fees of insolvency administrators the hotel’s real estate. The hotel cannot pay back the loan, but makes Lawyers’ fees enough money to operate otherwise. Assessors’ and auctioneers’ fees In addition, Doing Business evaluates the adequacy and integrity of the Other related fees existing legal framework applicable to liquidation and reorganization Outcome proceedings through the strength of insolvency framework index. The index tests whether economies adopted internationally accepted good Whether business continues operating as a going practices in four areas: commencement of proceedings, management of concern or business assets are sold piecemeal debtor’s assets, reorganization proceedings and creditor participation. Recovery rate for creditors Measures the cents on the dollar recovered by secured creditors Outcome for the business (survival or not) determines the maximum value that can be recovered Official costs of the insolvency proceedings are deducted Depreciation of furniture is taken into account Present value of debt recovered Strength of insolvency framework index (0- 16) Sum of the scores of four component indices: Commencement of proceedings index (0-3) Management of debtor’s assets index (0-6) Reorganization proceedings index (0-3) Creditor participation index (0-4) Latin America & OECD high Indicator Venezuela, RB Caribbean income Overall Best Performer Recovery rate (cents on the dollar) 5.6 30.8 71.2 93.1 (Norway) Time (years) 4.0 2.9 1.7 0.4 (Ireland) Page 59   Cost (% of estate) 38.0 16.8 9.1 1.00 (Norway) Creditor participation index (0-4) Doing Business 2018 Venezuela, RB Latin America & OECD high Indicator Venezuela, RB Caribbean income Overall Best Performer Recovery rate (cents on the dollar) 5.6 30.8 71.2 93.1 (Norway) Time (years) 4.0 2.9 1.7 0.4 (Ireland) Cost (% of estate) 38.0 16.8 9.1 1.00 (Norway) Outcome (0 as piecemeal sale and 1 as going 0 .. .. .. concern) Strength of insolvency framework index (0-16) 5.0 7.2 12.1 15.00 (6 Economies) Figure – Resolving Insolvency in Venezuela and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 72.31: Mexico (Rank: 31) 47.46: Brazil (Rank: 80) 42.32: Bolivia (Rank: 99) 41.24: Argentina (Rank: 101) 38.95: Regional Average (Latin America & Caribbean) 18.66: Venezuela, RB (Rank: 165) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their distance to frontier scores for resolving insolvency. These scores are the simple average of the distance to frontier scores for the recovery rate and the strength of insolvency framework index. Figure – Resolving Insolvency in Venezuela, RB – Time and Cost Time Cost 4.5 38.0 40 4.0 4.0 4 35 3.5 30 2.9 Cost (% of estate) Time (years) 3 2.4 25 2.5 16.8 18.0 20 2 16.5 1.8 1.8 1.7 14.5 12.0 15 1.5 9.1 1 10 0.5 5 0 0 Argentina Bolivia Brazil Latin America & Mexico OECD high income Venezuela, RB Caribbean Figure – Resolving Insolvency in Venezuela, RB and comparator economies – Measure of Quality the República Bolivariana de Venezuela 2 2 1 0 Page 60   Argentina 4 2.5 1 2 Argentina Bolivia Brazil Latin America & Mexico OECD high income Venezuela, RB Caribbean Doing Business 2018 Venezuela, RB Figure – Resolving Insolvency in Venezuela, RB and comparator economies – Measure of Quality the República Bolivariana de Venezuela 2 2 1 0 Argentina 4 2.5 1 2 Bolivia 3 2.5 0 1 Brazil 5.5 2.5 3 2 Mexico 5.5 2.5 2 1.5 OECD high income 5.4 2.8 2.3 1.9 Latin America & Caribbean 3.7 2.4 1.9 0.8 0 2 4 6 8 10 12 14 Sub-Indicator Score Management of debtor's assets index (0­6) Commencement of proceedings index (0­3) Creditor participation index (0­4) Reorganization proceedings index (0­3) Figure – Resolving Insolvency in Venezuela, RB and comparator economies – Recovery Rate Recovery Rate (cents on the dollar) 80 67.6 70 60 50 40.9 40 30.8 30 21.5 20 12.7 10 5.6 0 Venezuela, RB Argentina Bolivia Brazil Mexico Latin America & Caribbean Details – Resolving Insolvency in Venezuela, RB Indicator Answer Explanation Proceeding liquidation Bizbank would initiate a foreclosure procedure. Once the lawsuit filed, there would be (after an preliminary hearings, which would be followed by the formal declaration of bankruptcy of attempt at Mirage by the court, turning the process into a liquidation proceeding. Subsequently, the foreclosure) judge would appoint the liquidator / administrator of the bankruptcy. The procedure would be supervised judicially, and after the list of Mirage creditors is drawn up by the administrator, the public auction of its assets and the distribution of the profits of the sale among the creditors would be carried out. Outcome piecemeal sale Once the bankruptcy is declared, the administrator / liquidator will administer the debtor's assets, who must sell Mirage's assets, and distribute the proceeds among the creditors according to the legal priority order. There is no possibility that the company will continue to operate once the bankruptcy has been declared. Page 61   Venezuela, RB Argentina Bolivia Brazil Mexico Latin America & Caribbean Doing Business 2018 Venezuela, RB Details – Resolving Insolvency in Venezuela, RB Indicator Answer Explanation Proceeding liquidation Bizbank would initiate a foreclosure procedure. Once the lawsuit filed, there would be (after an preliminary hearings, which would be followed by the formal declaration of bankruptcy of attempt at Mirage by the court, turning the process into a liquidation proceeding. Subsequently, the foreclosure) judge would appoint the liquidator / administrator of the bankruptcy. The procedure would be supervised judicially, and after the list of Mirage creditors is drawn up by the administrator, the public auction of its assets and the distribution of the profits of the sale among the creditors would be carried out. Outcome piecemeal sale Once the bankruptcy is declared, the administrator / liquidator will administer the debtor's assets, who must sell Mirage's assets, and distribute the proceeds among the creditors according to the legal priority order. There is no possibility that the company will continue to operate once the bankruptcy has been declared. Time (in years) 4.0 It would take about 4 years for a liquidation proceeding after an attempt at foreclosure similar to the one described in the case study. The procedure would be initiated by the Bank filing for foreclosure. The Court will declare the bankruptcy of the debtor converting the foreclosure procedure into a liquidation proceeding. This stage would take approximately 6 months. Afterwards, a liquidator will be appointed and the list of creditors’ claims will be issued. This stage will take from 1 to 2 years. The sale of the debtor’s assets would take up to 2 years. Cost (% of 38.0 The costs would amount to approximately 38% of the value of Mirage’s estate. The main estate) component are the attorney’s fees (20%). The rest will be service fees, and cost associated with the auction and fees of the liquidator. Recovery rate (cents on the 5.6 dollar) Details – Resolving Insolvency in Venezuela, RB – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 5.0 Commencement of proceedings index (0-3) 2.0 What procedures are available to a DEBTOR when commencing insolvency (b) Debtor may 0.5 proceedings? le for liquidation only Does the insolvency framework allow a CREDITOR to le for insolvency of the debtor? (b) Yes, but a 0.5 creditor may le for liquidation only What basis for commencement of the insolvency proceedings is allowed under the (a) Debtor is 1.0 insolvency framework? generally unable to pay its debts as they mature Management of debtor's assets index (0-6) 2.0 Page 62   Does the insolvency framework allow the continuation of contracts supplying essential No 0.0 dollar) Doing Business 2018 Venezuela, RB Details – Resolving Insolvency in Venezuela, RB – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 5.0 Commencement of proceedings index (0-3) 2.0 What procedures are available to a DEBTOR when commencing insolvency (b) Debtor may 0.5 proceedings? le for liquidation only Does the insolvency framework allow a CREDITOR to le for insolvency of the debtor? (b) Yes, but a 0.5 creditor may le for liquidation only What basis for commencement of the insolvency proceedings is allowed under the (a) Debtor is 1.0 insolvency framework? generally unable to pay its debts as they mature Management of debtor's assets index (0-6) 2.0 Does the insolvency framework allow the continuation of contracts supplying essential No 0.0 goods and services to the debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome No 0.0 contracts? Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit No 0.0 after commencement of insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (c) No priority is 0.0 assigned to post- commencement creditors Reorganization proceedings index (0-3) 0.0 Which creditors vote on the proposed reorganization plan? N/A 0.0 Does the insolvency framework require that dissenting creditors in reorganization No 0.0 receive at least as much as what they would obtain in a liquidation? Are the creditors devided into classes for the purposes of voting on the reorganization No 0.0 plan, does each class vote separately and are creditors in the same class treated equally? Creditor participation index (0-4) 1.0 Does the insolvency framework require approval by the creditors for selection or No 0.0 appointment of the insolvency representative? Does the insolvency framework require approval by the creditors for sale of substantial No 0.0 assets of the debtor? Page 63   Does the insolvency framework require approval by the creditors for selection or No 0.0 appointment Doing Businessof the 2018insolvency representative? Venezuela, RB Does the insolvency framework require approval by the creditors for sale of substantial No 0.0 assets of the debtor? Does the insolvency framework provide that a creditor has the right to request No 0.0 information from the insolvency representative? Does the insolvency framework provide that a creditor has the right to object to Yes 1.0 decisions accepting or rejecting creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice”. Labor Market Regulation Doing Business presents the data for the labor market regulation indicators in an annex. The report does not present rankings of economies on these indicators or include the topic in the aggregate distance to frontier score or ranking on the ease of doing business. Detailed data collected on labor market regulation are available on the Doing Business website (http://www.doingbusiness.org/data/exploretopics/labor-market-regulation). The most recent round of data collection was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions (i) whether xed-term contracts are prohibited for about the worker and the business are used. permanent tasks; (ii) maximum cumulative duration of xed-term contracts; (iii) length of the The worker: probationary period; (iv) minimum wage. - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. Working hours - Is a full-time employee. (i) maximum number of working days allowed per - Is not a member of the labor union, unless membership is mandatory. week; (ii) premiums for work: at night, on a weekly rest day and overtime; (iii) whether there are The business: restrictions on work at night, work on a weekly rest - Is a limited liability company (or the equivalent in the economy). day and for overtime work; (iv) whether nonpregnant - Operates a supermarket or grocery store in the economy’s largest and nonnursing women can work same night hours business city. For 11 economies the data are also collected for the second as men; (v) length of paid annual leave. largest business city. - Has 60 employees. Redundancy rules - Is subject to collective bargaining agreements if such agreements cover (i) whether redundancy can be basis for terminating more than 50% of the food retail sector and they apply even to rms that workers; (ii) whether employer needs to notify are not party to them. and/or get approval from third party to terminate 1 - Abides by every law and regulation but does not grant workers more redundant worker and a group of 9 redundant bene ts than those mandated by law, regulation or (if applicable) collective workers; (iii) whether law requires employer to bargaining agreements. reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments due when terminating a redundant worker. Job quality (i) whether law mandates equal remuneration for work of equal value and nondiscrimination based on gender in hiring; (ii) whether law mandates paid or unpaid maternity leave; (iii) length of paid maternity Page 64   leave; (iv) whether employees on maternity leave the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice”. Doing Business 2018 Venezuela, RB Labor Market Regulation Doing Business presents the data for the labor market regulation indicators in an annex. The report does not present rankings of economies on these indicators or include the topic in the aggregate distance to frontier score or ranking on the ease of doing business. Detailed data collected on labor market regulation are available on the Doing Business website (http://www.doingbusiness.org/data/exploretopics/labor-market-regulation). The most recent round of data collection was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions (i) whether xed-term contracts are prohibited for about the worker and the business are used. permanent tasks; (ii) maximum cumulative duration of xed-term contracts; (iii) length of the The worker: probationary period; (iv) minimum wage. - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. Working hours - Is a full-time employee. (i) maximum number of working days allowed per - Is not a member of the labor union, unless membership is mandatory. week; (ii) premiums for work: at night, on a weekly rest day and overtime; (iii) whether there are The business: restrictions on work at night, work on a weekly rest - Is a limited liability company (or the equivalent in the economy). day and for overtime work; (iv) whether nonpregnant - Operates a supermarket or grocery store in the economy’s largest and nonnursing women can work same night hours business city. For 11 economies the data are also collected for the second as men; (v) length of paid annual leave. largest business city. - Has 60 employees. Redundancy rules - Is subject to collective bargaining agreements if such agreements cover (i) whether redundancy can be basis for terminating more than 50% of the food retail sector and they apply even to rms that workers; (ii) whether employer needs to notify are not party to them. and/or get approval from third party to terminate 1 - Abides by every law and regulation but does not grant workers more redundant worker and a group of 9 redundant bene ts than those mandated by law, regulation or (if applicable) collective workers; (iii) whether law requires employer to bargaining agreements. reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments due when terminating a redundant worker. Job quality (i) whether law mandates equal remuneration for work of equal value and nondiscrimination based on gender in hiring; (ii) whether law mandates paid or unpaid maternity leave; (iii) length of paid maternity leave; (iv) whether employees on maternity leave receive 100% of wages; (v) availability of ve fully paid days of sick leave a year; (vi) eligibility requirements for unemployment protection. Details – Labor Market Regulation in Venezuela, RB Answer Hiring Page 65   Fixed-term contracts prohibited for permanent tasks? Yes days of sick leave a year; (vi) eligibility requirements for unemployment protection. Doing Business 2018 Venezuela, RB Details – Labor Market Regulation in Venezuela, RB Answer Hiring Fixed-term contracts prohibited for permanent tasks? Yes Maximum length of a single xed-term contract (months) 12.0 Maximum length of xed-term contracts, including renewals (months) 24.0 Minimum wage applicable to the worker assumed in the case study (US$/month) 7023.7 Ratio of minimum wage to value added per worker 6.0 Maximum length of probationary period (months) 1.0 Working hours Standard workday 8.0 Maximum number of working days per week 5.0 Premium for night work (% of hourly pay) 30.0 Premium for work on weekly rest day (% of hourly pay) 50.0 Premium for overtime work (% of hourly pay) 50.0 Restrictions on night work? Yes Whether nonpregnant and nonnursing women can work the same night hours as men Yes Restrictions on weekly holiday? Yes Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 15.0 Paid annual leave for a worker with 5 years of tenure (working days) 19.0 Paid annual leave for a worker with 10 years of tenure (working days) 24.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 19.3 Redundancy rules Dismissal due to redundancy allowed by law? No Third-party noti cation if one worker is dismissed? N/A Third-party approval if one worker is dismissed? N/A Third-party noti cation if nine workers are dismissed? N/A Third-party approval if nine workers are dismissed? N/A Retraining or reassignment obligation before redundancy? N/A Page 66   Third-party Doing approval Business 2018 if nine workers are Venezuela, RBdismissed? N/A Retraining or reassignment obligation before redundancy? N/A Priority rules for redundancies? N/A Priority rules for reemployment? N/A Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure N/A Notice period for redundancy dismissal for a worker with 5 years of tenure N/A Notice period for redundancy dismissal for a worker with 10 years of tenure N/A Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) N/A Severance pay for redundancy dismissal for a worker with 1 year of tenure N/A Severance pay for redundancy dismissal for a worker with 5 years of tenure N/A Severance pay for redundancy dismissal for a worker with 10 years of tenure N/A Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) N/A Job quality Equal remuneration for work of equal value? No Gender nondiscrimination in hiring? Yes Paid or unpaid maternity leave mandated by law? Yes Minimum length of maternity leave (calendar days)? 182.0 Receive 100% of wages on maternity leave? Yes Five fully paid days of sick leave a year? Yes Unemployment protection after one year of employment? Yes Minimum contribution period for unemployment protection (months)? 12.0 Business Reforms in Venezuela In the year ending June 1, 2017, 119 economies implemented 264 total reforms across the di erent areas measured by Doing Business. Doing Business has recorded more than 2,900 regulatory reforms making it easier to do business since 2004. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are the reforms for Venezuela implemented since Doing Business 2008. = Doing Business reform making it easier to do business. = Change making it more di cult to do business. DB2018 Starting a Business: República Bolivariana de Venezuela made starting a business more expensive by raising several fees charged during the business registration process. Lawyer fees and publication costs were also increased. DB2017 Starting a Business: The República Bolivariana de Venezuela made starting a business more expensive by raising the value of the tributary unit and lawyers’ fees. It also made the process more time consuming by limiting the work schedule of the public sector. Page 67   Minimum contribution period for unemployment protection (months)? 12.0 Doing Business 2018 Venezuela, RB Business Reforms in Venezuela In the year ending June 1, 2017, 119 economies implemented 264 total reforms across the di erent areas measured by Doing Business. Doing Business has recorded more than 2,900 regulatory reforms making it easier to do business since 2004. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are the reforms for Venezuela implemented since Doing Business 2008. = Doing Business reform making it easier to do business. = Change making it more di cult to do business. DB2018 Starting a Business: República Bolivariana de Venezuela made starting a business more expensive by raising several fees charged during the business registration process. Lawyer fees and publication costs were also increased. DB2017 Starting a Business: The República Bolivariana de Venezuela made starting a business more expensive by raising the value of the tributary unit and lawyers’ fees. It also made the process more time consuming by limiting the work schedule of the public sector. DB2016 Starting a Business: República Bolivariana de Venezuela made starting a business more di cult by increasing incorporation costs. It also made starting a business more di cult by making the registration at the Venezuelan Social Security Institute (IVSS), the National Bank for Housing and Habitat (BANAVIH) and the National Institute of Socialist Cooperation & Education (INCES) prerequisites for the Ministry of Labor (Minpptrass) registration. DB2015 Starting a Business: República Bolivariana de Venezuela made starting a business more di cult by increasing incorporation costs and by requiring companies to register within the Superintendence for Socioeconomic Rights (SUNDEE). DB2014 Starting a Business: República Bolivariana de Venezuela made starting a business more costly by increasing the company registration fees. Getting Credit: República Bolivariana de Venezuela improved access to credit information by starting to collect data on rms from nancial institutions. DB2013 Starting a Business: República Bolivariana de Venezuela made starting a business more di cult by increasing the cost of company incorporation. Paying Taxes: República Bolivariana de Venezuela made paying taxes more costly and di cult for companies by introducing a sports, physical activities and physical education tax. Labor Market Regulation: República Bolivariana de Venezuela introduced a new Labor Code that prohibits redundancy dismissals. DB2012 Paying Taxes: República Bolivariana de Venezuela made paying taxes costlier for rms by doubling the municipal economic activities tax (sales tax). DB2011 Starting a Business: República Bolivariana de Venezuela made starting a business more di cult by introducing a new procedure for registering a company. Getting Credit: República Bolivariana de Venezuela improved access to credit information by creating a private credit bureau. Paying Taxes: República Bolivariana de Venezuela abolished the tax on nancial transactions. DB2010 Page 68   Paying Taxes: República Bolivariana de Venezuela abolished the tax on nancial transactions. Doing Business 2018 Venezuela, RB DB2010 Paying Taxes: República Bolivariana de Venezuela made paying taxes more costly for companies by introducing 2 new taxes. DB2009 Paying Taxes: República Bolivariana de Venezuela made paying taxes more costly for companies by levying a nancial transactions tax on payments made to third parties. DB2008 Registering Property: República Bolivariana de Venezuela reduced the time needed for registering property by implementing time limits at several agencies. Paying Taxes: República Bolivariana de Venezuela made paying taxes more di cult for companies by introducing 3 new taxes. Trading across Borders: República Bolivariana de Venezuela made exporting more di cult by introducing new requirements for registration of export transactions. Page 69   Trading across Borders: República Bolivariana de Venezuela made exporting more di cult by introducing new requirements for registration of export Doing Business transactions. 2018 Venezuela, RB Page 70