- Gustavo Valecillos, president of Consecomercio, said that the reduction of this tax will improve the profitability of companies | Main photo: EFE
After the President of the Republic, Nicolás Maduro, announced on July 12 the Elimination of the Tax on Large Financial Transactions (IGTF) in bolivarsseveral experts have given their opinions on the scope of this measure and how it might affect Venezuela’s economy.
Economist and director of the consulting firm Ecoanalítica, Asdrúbal Oliveros, clarified that the measure taken by the Venezuelan president does not mean the elimination of this tax but rather a “license” that extends its payment for an indefinite period.
There is no repeal as such. What there is is a kind of license for a time that is not defined, where it was decided that the IGTF has a rate of 0%, that is, that it is not charged. But it remains in force. That is, tomorrow there may be an (Official) Gazette in which it can be reestablished,” Oliveros said on July 15 in an interview for Onda La Superestación.
For his part, Gustavo Valecillos, president of the National Council of Commerce and Services (Consecomercio), expressed his support for the resolution issued by Nicolás Maduro and recalled that several years ago they requested the Executive to take this measure.
The representative of Consecomercio estimated that the reduction applied might improve the profitability of companies, since according to the latest reports 60% of the profits of the trade and services sector go to paying taxes.
Asdrúbal Oliveros commented that despite the fact that the IGTF for transactions in bolivars has been reduced to 0%, this tax is still charged for payments made in dollars, which represents 3%. For the director of Ecoanalítica, this tax represents a larger universe of revenue due to the recurrent use of the US currency in Venezuela.
“70% of payments in foreign currency are made in cash. This means that many people use cash (in dollars) and are being taxed with this tax. (…) It is laughable that someone who pays 5 dollars for a cup of coffee has to pay a tax that is supposed to be for large financial transactions,” Oliveros said.
Gustavo Valecillos stressed that, in his opinion, the reason why the national government has not eliminated the IGTF in dollars is because it seeks to strengthen the use of the bolivar as a currency of exchange.
The Bolivar regains “trust” among citizens
Asdrúbal Oliveros emphasized that in recent months the bolivar has been gaining ground as a currency of exchange in Venezuela compared to previous years.
The universe of transactions in bolivars has increased. At Ecoanalítica we have followed this up by studying transactions in Venezuela. (…) In February, payments in bolivars represented nearly 55% of the total,” Oliveros commented.
The expert recalled that in 2019 and 2020, transactions in bolivars were around 40% and said that this is due to the reduction in inflation and exchange rate stability. “However, much more is needed to correct the imbalances of this economy (that of Venezuela), which is multi-currency,” he added.
The director of Ecoanalítica gave as an example the use of dollars and euros, in addition to payments made in Colombian pesos in areas close to the border with Colombia. “If you go to the border with Brazil you can see the presence of the real brisero and even the use of gold due to the proximity of the mining arc,” he said.
Elimination of IGTF in Bolivars
President Nicolás Maduro signed a decree that eliminates the Tax on Large Financial Transactions (IGTF) in bolivars, which charged 2% on transactions in local currency to special taxpayers.
“I am signing the decree to eliminate it by the very fact2% of the IGTF. We are already in a position to do so and what needs to be increased is the efficiency in the collection of other taxes that exist,” Maduro declared on July 12.
What does the IGTF payment consist of?
The IGTF was approved on December 30, 2015, when it was published in the Official Gazette number 6,210. However, on February 25, 2022, a reform to this law was enacted to collect taxes on foreign currency transactions, due to the growing use of foreign currency in the country.
The Partial Reform Law of the Decree Law on Tax on Large Financial Transactions was enacted on February 25, 2022 in Official Gazette number 6,687.
The following persons are required to pay the IGTF contribution:
– Natural persons who make payments in currency other than the bolivar or in cryptoassets other than those issued by the Central Bank of Venezuela (BCV).
– Legal entities that make payments in currency other than the bolivar or in cryptoassets other than those issued by the BCV.
– Entities without legal personality (for example: unclaimed estates, joint property, de facto companies) that make payments in currency other than the bolivar or in cryptoassets other than those issued by the BCV.
Before the reform, this tax applied to all transactions in bolivars carried out by special taxpayers designated by the National Integrated Service of Customs and Tax Administration (Seniat), known as “special taxpayers.”
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2024-07-16 08:46:11
