Venezuelan Decree Introduces Taxes For Crypto And Foreign Fiat Operations
Venezuela has introduced new taxes for operations that involve the use of cryptocurrency and foreign fiat, according to an official gazette notice published earlier this week.
According to the Gaceta Oficial number 6,420, a government decree No. 3,719 outlines what the publication has described as an economic emergency. The tax-related announcement follows another decree on the country’s regulatory framework concerning the new rules.
It is noted that all Venezuelans who undertake any businesses using cryptocurrencies or deal with foreign fiat are henceforth obliged to disclose earnings as well as pay taxes using the same currency used in their operations.
It means that citizens who use crypto or foreign currencies, like the USD, will not pay taxes in the national currency, the sovereign bolivar. Incidentally, the country’s fiat currency, which was launched in August, last year, has lost value following massive hyperinflation.
Per the government’s official newspaper, tax exemptions target all operations involving securities traded on the Caracas Stock Exchange. Public institutions or entities that trade in exported goods and services will also be subject to the new guidelines.
The decree does not specify the exact taxation rates for crypto operations but provides that the country’s tax and customs regulator (SENIAT) has the mandate to issue the necessary guidelines.
The agency’s guiding principles will outline how crypto users can report incomes and pay taxes. Notably, the decree came into effect immediately after publication.
Venezuela’s banking regulator (SUDEBAN) has also been tasked with creating a regulatory framework that will guide the country’s financial institutions on how to comply with the new taxation measures.
Implementation of the new measures falls under the purview of the Ministry of Economy and Finance, with penalties for non-compliance already outlined despite the lack of a clearly defined regulatory framework for the decree’s implementation.
Local news outlet Runrun has reported that some municipalities within the country have indicated that they would use Venezuela’s national crypto Petro for taxation. The municipal governments already considering the controversial crypto include Vargas and Maracaibo.
However, that position would appear to contradict that reported by the country’s tax office. On January 8, the secretary to the tax administration service (SEDEMAT), Jean Carlos Martinez, reportedly told a local news outlet that Petro would not be used when collecting the new taxes.
He particularly noted that the state-owned crypto would be utilized in determining and defining the minimal tax rates. He reiterated the point that the Petro token uses two exchange rates- against the U.S. dollar and as the country’s unit of account. For the latter, one Petro is equal to 9,000 bolivars.
Venezuela announced in August 2018 that it would begin using the national cryptocurrency as a unit of account. The coin would be utilized in the processing of salaries as well as in the sale of goods and services.
Earlier this week, it was revealed that Venezuela filed a complaint against the U.S. at the World Trade Organization (WTO), referring to discriminatory restrictions placed on its national cryptocurrency. It accuses the United States of attempting to “isolate” the country economically.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.