Venezuelan Government Approves New Tax for Cryptocurrency and Foreign Currency Transactions

The Venezuelan Government has approved a new tax that would affect transactions made in foreign currency and cryptocurrency transactions. Approved by the National Assembly of the country, the tax, called the “large financial transactions” tax would collect up to 20% over transactions made in currencies different from the national fiat currency or the Petro.

Venezuelan Government To Tax Crypto Transactions

The Venezuelan government has approved a new tax that will affect transactions and payments made with cryptocurrencies and foreign currency. The tax, which is called the “large financial transaction” tax, seeks to incentivize the use of the national currency that has lost its relevance in a multi-currency environment like the one present in Venezuela in the last years.

The tax establishes that any transactions or payments made in foreign currencies or cryptocurrencies, without a limit quantity, will have to pay up to 20% over each movement, depending on the nature of it and the companies or persons making them.

The percentage to be paid will be established by the national government after the official publication of the law, but in its first application, it will collect 2.5% on these payments.

Cryptocurrency Volumes Recognized And Reactions

The inclusion of cryptocurrencies in this law is a recognition of the importance of this kind of currency and the volume that is moved in the country in regard to transactions and payments. This is the opinion of Aaron Olmos, a national economist. However, the main objective of the law would be to tax transactions made using dollars, which are 65% of the operations and payments in the country according to estimates.

Jose Guerra, a Venezuelan economist, thinks that this will be a hit to the pocket of the Venezuelans, that use foreign currency and cryptocurrencies to store their savings. About this, Guerra stated:

It must be recognized that foreign currency has solved part of the cash problems, reserves of value and savings of everyone in the country. Also crypto assets, to a certain extent. Making this decision is trying to privilege one means of payment over another.

Another secondary effect of this law would be the incentivization of the creation of black markets to avoid the payment of this law, according to Oscar José Torrealba, director of the Economic Knowledge Dissemination Center in the country. Torrealba stated that merchants and people would transact outside the law encouraged by tax pressure.