Venezuela to collect taxes in crypto due to hyperinflation

Venezuela to collect taxes in crypto due to hyperinflation

National cryptocurrency Petro to be used to collect taxes in 304 municipalities in the country

The Bolivarian Council of Mayors in Venezuela has signed an agreement that permits the collection of taxes and sanctions using the ‘sovereign’ cryptocurrency Petro (PTR).

 According to a new report published by the government, the ‘National Tax Harmonization Agreement’, which involves 305 municipalities across the country, was signed last Sunday to protect people from the ongoing hyperinflation crisis in the country. Petro, or Petromoneda, is a cryptocurrency that was launched by the government of Venezuela in 2018.

Vice President of Venezuela, Delcy Rodríguez, is in charge of implementing the initiative through the creation of a single registry of taxpayers based on a digital consultation tool. Rodríguez, in her address to the mayors, explained that the government plans to use an information exchange and monitoring system for companies to record payments in the state cryptocurrency. In particular she highlighted cross-departmental measures that will be taken to prevent double-taxation.

One of the Mayors, Erika Farias, highlighting the importance of the agreement for the country’s municipalities said: “This tax harmonization agreement, which we have reached after a great debate among the 305 Bolivarian mayors, is an unprecedented event in our country”.

The agreement, in accordance with the Venezuelan legal system, prohibited the collection of taxes in foreign currency and emphasised the use of the state cryptocurrency to protect the productive sector and the Venezuelan people from “distorted prices”. The initiative is expected to significantly increase the usage of the cryptocurrency.

Vice President Rodríguez commented on the initiative by saying: “It is the simplification of procedures, making the State’s administrative activity at the service of the people more efficient, of the economic sectors that stimulate economic activity in the productive and commercial areas, framed in this week of flexibility that began on Monday”.

Out of the 335 Mayors in Venezuela, 91% are under the mandate of the United Socialist Party of Venezuela, whereas 30 mayors are led by opponents of the regime, such as Nicolás Maduro. The non-Maduro- supported faction of the municipal governments has raised concerns over the agreement, citing that they do not have the appropriate technology to process Petro payments. These 30 municipalities will continue to use Venezuela’s fiat currency, Bolívar.

The Venezuelan Government announced on June 11 that about 15% of all fuel payments at petrol stations across the country were being made using Petro (PTR). This initiative comes within a week of the new state-backed plan to promote the widespread use of the token.

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