New Tax Law for Cryptocurrencies in Venezuela

The press release reads:

Paying in dollars or cryptocurrencies in Venezuela will be expensive. The Reform Law approved in first discussion by the National Assembly so establishes. The transactional dollarization, which to a great extent provided a breath of fresh air to a hyperinflationary economy such as the Venezuelan one, will be punished by the Maduro government. At least that is what is hinted at in the Reform of the Large Commercial Transactions Tax Law.

Upon completion of the reform, transactions in dollars or cryptocurrencies, other than the petro, will have to pay a tax that could reach up to 20% of the value of the transaction, as provided by the National Executive, according to the National Executive.

But do not let the name of the Law deceive you. The reform of the Large Commercial Transactions Tax Law is aimed at all transactions, not only large ones. Or at least we are talking about all transactions involving the country's private sector and the ordinary citizen, who in recent years, and motivated by the Venezuelan hyperinflation, has replaced the bolivar for the dollar and even for cryptocurrencies as a way to take refuge and avoid devaluation.

Then, any citizen who wishes to pay in any commercial premises with foreign currency or cryptos must pay this tax, and if we take into account that the latest data published by the consulting firm Ecoanalítica point out that 65% of commercial transactions are paid in foreign currency in the country, then the tax tucks most Venezuelans.

What does the Law say?

The Reform of the Law was specifically made to include a tax on all transactions in dollars and cryptocurrencies made in the country.

This reform states that payments in foreign currency or with cryptoassets other than the petro made by any natural or legal person, through the mediation of a financial institution, will have to pay a tax that may comprise between 2% and 8%. However, while the Executive establishes the rate to be paid, it will remain in the range of 2.5%.

Link spanish: https://tuflashnews.com/pagar-en-dolares-sera-mas-caro-nuevo-impuesto-que-trae-maduro/

Analysis and summary

In Venezuela we have never paid taxes on physical commercial transactions with fiat, in fact there are people in Venezuela who are born and live to be 80 years old and never pay taxes, that is a reality.

Most people pay VAT: or value added tax, basically, if a kilo of sugar is worth $1.00 plus VAT it would be $1.02 and this is the normal taxes we pay for years.

All persons wishing to pay a with $ Cryptocurrency, Digital Dollar, Dollar Bank or Cash must pay from 2% to 20% on the value of the transaction.

If a market comes out at a total of $60 then you will pay: up to $66 or more depending on how you pay.

Problems for cryptocurrency adoption

In Venezuela there are more than 2,000 businesses that accept Bitcoin Cash, Dash and other cryptocurrencies directly without intermediaries, and approximately 20,000 businesses with Cryptobyer which is an exchange with points of sale with cryptocurrencies, in short, we are one of the countries with more commercial transactions in cryptocurrencies in the world.

We who have experience with business owners on the street know their words and their needs. For example, an entrepreneur does not want to pay taxes because they made a heavy investment and need at least in a period of 1 year to recover at least half or all of the investment, while an entrepreneur with years of business has no problem in paying taxes because it is normal for him to pay taxes.

Now businesses will see a reduction in the number of people paying with $ or cryptocurrencies, but this is only speculation, there is still no confirmation and there is no protocol to record transactions, it is a matter of time to know, but now we have to clarify certain doubts and give security to new businesses.

This is the Naturalization of Adoption

This new law affects but puts on the discussion table something very important, that the government is recognizing that something incredible is happening with cryptocurrencies in Venezuela and helps to naturalize their use, so it is a recognition of something irreversible something that is already impossible to stop.

Tax Security

The most difficult companies to convince to accept BCH are the large corporations, they handle many protocols of their administrative structure and of course they are the most bureaucratic, with the obligation to pay taxes then these large corporations must learn to manage their financial structure also with the blockchain that is very positive, because now they have the security to comply with public expenses and a legal obligation

I think that if we know how to handle the advice and informing ourselves with the real sources we can take advantage of it, for the moment we can not simply adopt cryptocurrencies and that's it, we must know in depth how this new law will be applied.

I will be reporting back