Venezuelan lawmakers accept tax on foreign currency transactions

CARACAS, February 3 (Reuters)Venezuela’s ruling party-controlled national assembly has authorized President Nicolas Maduro’s government to levy a tax on domestic transactions carried out in foreign currency, amid the de facto dollarization of the economy.

Individuals and companies will pay fees for transactions in banks and companies ranging from 2% to 20% under the approved reform.

As the government determines what percentage will apply this year, a 3% tax will be levied on every foreign currency transaction.

“The rich and the big corporations put dollars in their pockets and don’t give the Venezuelan state even a penny of those dollars that they use for transactions,” said the president of the assembly. , Jorge Rodriguez, during a television session. “The bolivar (local currency) is strengthened with this law.”

Bank transactions in local currency have been taxed since 2016.

The law will ensure that dollar transactions help generate resources, said ruling party lawmaker Jesus Farias.

“You can’t say it’s something regressive to reach the most needy,” he said.

Maduro’s administration has faced deep financial difficulties amid declining oil production blamed on weak investment, mismanagement and US sanctions.

The law will have an inflationary impact, local consultancy Sintesis Financiera said on Twitter.

“The predominant incentive is tax collection,” he added.

Dollar cash transactions have increased since Maduro eased economic controls in 2019, allowing banks to offer dollar-denominated accounts and store foreign currency.

Washington sanctions block international transfers to and from the South American country, which faces a prolonged recession and inflation that ended 2021 at 686.4%.

The duty can trickle down to regular consumers, said tax lawyer Hector Orochena.

“This will mean significant costs for large companies, which will have to adjust their financial models,” he said.

The government cut spending in bolivars in a bid to stabilize the exchange rate and inflation and announced on Wednesday that local banks could allocate 10% of foreign currency deposits to credit.

(Reporting by Mayela Armas, Vivian Sequera and Deisy Buitrago Writing by Julia Symmes Cobb; Editing by Richard Chang)

(([email protected]; +57-316-389-7187;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.