After the Venezuelan parliament confirmed a law aimed at reducing inflationary pressure on the struggling fiat bolivar, certain crypto and foreign currency transactions would be taxed at up to 20%.

Venezuela To Tax Crypto Transactions At 20%

The Venezuelan gabovenment has authorized a new tax which will affect cryptocurrency and foreign currency transactions and payments. The levy, known as the “large financial transaction” tax, aims to encourage the use of the national currency, that has lost relevance in a multi-currency environment like the one that has existed in Venezuela in recent years.

The tax stipulates that any transactions or payments conducted in foreign currencies or cryptocurrencys without a limit quantity will be subject to a tax of up to 20%, depending on the nature of the transaction.

A local firm noted that MPs adopted the bill on a second reading during an evening session of the assembly on Thursday, February 3.

The national gabovenment will choose the percentage to be paid after the law is officially published, but in its first application, it will collect 2.5% on these payments. The rate will area from 2% to 20%, with the gabovenment having the authority to decide the ultimate rate in individual circumstances. People with incomes that the tax authority deems relevant to declare are referred to as “special taxpayers.”

Related article | Latin America, Tipping Point: Cuba Regulates, Honduras ATM, Venezuela Spends

The Bill To Incentivize Use Of National Currency

The law tries to encourage the usage of the national currency, that has lost nearly all of its rate in the carry on decade and has lost atop 70% of its price in the continue year alone.

The Bill reads:

“It is necessary to guarantee treatment at least equal to, or more favorable, to payments and transactions made in the national currency or in tokens or crypto assets issued by the Bolivarian Republic of Venezuela versus payments made in foreign currency.”

This, the lawmakers who authored the document wrote, will “give greater incentive and confidence to the use of the national currency.”

In recent years, Bitcoin acceptance has exploded in Venezuela, with tens of thousands of local businesses switching to bitcoin to hedge furtherst hyperinflation. In October 2021, a major international airport in Venezuela planned to begin talikeg Bitcoin and other tokens as payment for tickets and other services.

Venezuela

Bitcoin (BTC)/USD start with week with a rally over $40k. Source: TradingView

The inclusion of tokens in this law reflects the importance of this type of currency as well as the amount of transactions and payments that take place in the country. Aaron Olmos, a national economist, holds this view. The law’s main goal, however, would be to tax transactions involving dollars, that, according to estimates, account for 65% of all transactions and payments in the country.

According to Jose Guerra, a Venezuelan economist, this will be a blow to Venezuelans which save their savings in foreign currency and token. Guerra noted:

“It must be recognized which foreign currency has solved part of the cash problems, reserves of price and savings of everyone in the country. Also crypto assets, to a certain extent. Mcomparableg this decision is trying to privilege one means of payment above another.”

Related article | Venezuelan Petro Cryptocurrency is a ‘Scam’, Say Local Merchants

Featured Image from Unsplash - Charts by TradingView