Venezuela gives crypto some love: Bitcoin and other cryptocurrencies exempt from some taxes for one year

In a surprising move, the Venezuelan government has exempted transactions in Bitcoin and other cryptocurrencies from certain taxes, aiming to boost adoption of digital assets.

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The Venezuelan government has decided to exempt bitcoin (BTC) and other cryptocurrencies transactions from some taxes, one year after the entry into force of the Law of Taxes on Large Financial Transactions (IGTF, for its acronym in Spanish).

The measure was announced in Official Gazette 42.575 and came into effect on February 26. The document establishes in its article 5, that “those operations made “in a currency other than the legal tender in the country or in cryptocurrencies or cryptoassets other than those issued by the Bolivarian Republic of Venezuela” are not subject to the payment of the tax”.

The new governmental decision is aimed at individuals, legal entities and economic entities without legal personality that are not qualified as special taxable persons. However, the measure will only be in force for one year.

A “special taxpayer”, is any legal entity previously identified by the tax authority (Seniat) and that has certain income that obliges it to have to declare.

The IGTF exoneration also covers other financial operations, such as stock exchange operations, remittances and banking transactions. These include payments made in bolivars with national and international debit or credit cards from foreign currency accounts.

The IGTF was reformed by the Venezuelan parliament and became effective in February 2022. There it stipulated the application of taxes ranging from 2% to 20% to transactions with cryptocurrencies and foreign currencies, as reported by CriptoNoticias on that date.

As reported by this media, although it is true that Venezuelans have adopted BTC and cryptocurrencies to protect themselves from inflation, there are very few companies that use cryptoassets.

For Venezuelan lawyer and bitcoiner, Raúl Velásquez, the tax did not have a significant impact as far as this new economy is concerned, at least not when it comes to small and medium-sized companies.

In Velasquez’s opinion, this is because there is still a lack of significant business momentum to finish massifying the adoption of bitcoin in the inflationary Venezuelan economy.

The tax affected Venezuelans

According to Venezuelan economists and business associations, the IGTF generated more problems than solutions to the battered economic situation, so they asked the government to eliminate the tax.

“As long as the government does not manage to increase oil production, lower discounts and collect, it will not reduce the fiscal gap. For this reason, it will continue to look for ways to collect taxes (such as the IGTF), even if they generate problems in the economic activity”, in this way, the economist Luis Oliveros, explained the reasons for the creation of the tax.

For the president of Consecomercio, Tiziana Polesel, the tax “affected consumers” and also influenced the increase in the prices of products. “Despite appearing to be a tax of only 3%, it is really a cascading tax,” she told a local media.

Products in Venezuela had an increase between 12% and 14% since the implementation of the tax, according to data from the business organization.

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