Venezuela to Collect Tax in Cryptocurrency - But No Petro?

Colin Muller

A decree issued yesterday by Nicolas Maduro’s government states that those conducting business in Venezuela involving either cryptocurrency or foreign fiat money must also pay taxes on that business using cryptocurrency or foreign fiat money, respectively.

Specifically, article one of the decree in question - number 3,719, of gazette number 6,420 - states that:

The taxpayers who carry out transactions [...] authorized by the Law [...] in foreign currency or cryptocurrency [...] which constitute taxable events generating national taxes, must determine and pay obligations in foreign currency or cryptocurrencies

Exceptions to this stipulation, according to article two, include an exemption for securities traded on the national stock market, and on the “export of goods and services, carried out by bodies or public entities.”

The plan to accept cryptos is not fleshed-out yet, however, and currently seems to be only an aspiration of this particular issue of the gazette. Article five describes that the country’s agency responsible for regulating banking, the SUBEDAN, will in future “dictate the regulatory norms of the adjustments that must be carried out by the institutions that make up the banking sector for the execution of this decree."

Which Crypto?

Notably, the decree does not mention which particular cryptoasset(s) are usable for paying taxes. There is no mention anywhere in the decree of the country’s national crypto, the Petro (PTR), a ERC-20 token issued on the Ethereum network.

CryptoGlobe recently reported on Venezuela’s stated intention to (eventually) conduct its hydrocarbon trade using only the Petro. This was a noteworthy decision because the US has sanctioned all use of PTR or any trade conducted using it.

Russian Deputy Finance Minister Sergei Storchak recently expressed uncertainty about conducting trade with Venezuela using the Petro, after Maduro traveled to Russia in an effort to foster non-US dollar dominated trade arrangements.

Russia is also subject to US and US-backed sanctions, and is also considering its own implementation of a national cryptocurrency to conduct Eurasian trade.

President Maduro is set to begin his second term of office tomorrow. Latin American politics are increasingly heading to the right, and the regional Lima Group has refused to recognize Maduro’s legitimacy to occupy his office.

Venezuela Suspends Free Fuel Amid Shortages, Petro (PTR) an Option for Payment

Colin Muller

According to a missive from the Venezuelan government, citizens will be able to pay for gasoline in the national Petro (PTR) cryptocurrency, in addition to U.S. dollars.

The switch comes amid a larger move from the socialist government, ending its long-standing free gasoline subsidies to citizens amid shortages that have recently hit the country. The Financial Times reports that Venezuelans will still receive 60 liters a month for almost free, at $0.02 per liter—enough to fill an average car twice.

Anything more than that will have to be purchased at close to market price, about $0.50 per liter, and only at one of 200 government approved gasoline stations.

Patria Cards

Moreover, in order to be eligible for this subsidised gas, Venezuelans are obliged to sign up to receive their Patria—Fatherland—card. Many citizens have bristled at the prospect of being forced onto this government program, seeing it as an intrusive method of government control.

Indeed, use of the Patria card goes through a government system called the Sistema Biopago, or “Bio-pay System”, a biometric identity system.

Once an oil-producing country, mismanagement of Venezuela’s nationalized oil industry over the last two decades has resulted in a precipitous fall in production.

In addition, relentless US sanctions in recent years on oil from Venezuela have helped to cripple the country’s economy; and the recent historic collapse in the price of oil, following a collapse in global demand caused by the COVID-19 pandemic, seems to have been the straw on Venezuela’s back.

Featured Image Credit: Photo via Pixabay.com