On January 7, 2019, the government of Venezuela published a decree detailing the process of taxation payment with regards to cryptocurrencies and foreign fiat currency.
As cryptocurrency becomes more widely used, the subject of its taxation inevitably comes up. In places like the United States, the Internal Revenue Service has been criticized for failing to provide concrete and clear guidelines for the payment of taxes relating to cryptocurrency.
This, however, is not the case in places like Venezuela as the government has just published an official decree detailing the protocol for the payment of taxation relating to cryptocurrency as well as foreign fiat currency.
The decree in question is number No. 3719 and is published in the Gaceta Oficial edition No. 6,420. The decree is also accompanied by an explanation of the framework as well as the reasons for the new law which is described by an economic emergency.
As revealed last year, Venezuela is in a state of an economic downturn and has issued the Petro, a national cryptocurrency that the government hopes will turn the nation’s fortunes around.
The New Framework
According to the decree, all Venezuelans who have had any dealings in cryptocurrency or in foreign currency are required to report their income and pay taxes in the currency in which the dealings took place rather than Venezuela’s official currency, the bolivar.
This isn’t surprising as the bolivar’s value has taken a significant hit in recent times and is suffering from hyperinflation.
There are some exemptions to this rule as those whose dealings are with the Caracas Stock Exchange are exempted as well as those who deal in the export of goods traded by public institutions.