The global crypto regulatory framework has significantly evolved, and this has largely been attributed to the increased rate of adoption. As one of the largest crypto economies globally, Venezuela has joined the trend by launching a tax on cryptocurrency investments.
The Venezuelan government has passed a new tax that will impact cryptocurrency and foreign currency transactions. This tax seeks to revive the use of the country’s fiat currency that has been affected by the ongoing economic crisis.
Venezuela passes tax on crypto and forex transactions
Venezuela has been a multicurrency country over the past few years, which has affected the value of the country’s fiat. The government has now announced a tax that ensures each transaction made in cryptocurrency and foreign currency is subject to a tax of up to 20%. The tax will depend on the nature of the transaction and the parties making the transaction.
The national government will determine the tax to be paid after the law has been officiated. However, 2.5% will be collected from these transactions during the first phase.
The use of cryptocurrencies in Venezuela has increased significantly over the past few years. Cryptocurrencies have accounted for a large section of transactions and payments in the country. While the use of crypto is growing, the US dollar has dominated financial transactions in the country, accounting for 65% of the operations and payments made in the country.
The tax could affect Venezuelans
The imposition of this tax could affect Venezuelans who are highly reliant on cryptocurrency and foreign currency transactions. According to Jose Guerra, a Venezuelan economist, this tax could have a major impact on Venezuelans and dent their savings.
“It must be recognized that foreign currency has solved part of the cash problems, reserves of value and savings of everyone in the country. Also crypto assets, to a certain extent. Making this decision is trying to privilege one means of payment over another,” Guerra opined.
This tax law could also affect the legitimacy of the crypto market in Venezuela. It will increase the popularity of black markets, allowing people to transact on foreign currency and crypto while avoiding this tax.
The director of the Economic Knowledge Dissemination Center in Venezuela, Oscar Jose Torrealba, noted that this law would encourage merchants and people to conduct transactions outside the law due to the increased tax pressure.
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