11 December 2014
In the Official Gazette of the Bolivarian Republic of Venezuela Extraordinary N° 6,150 of November 18th, 2014, it was published the Presidential Decree with Force of Law of Foreign Exchange Control Regime and its Violations (“the Law”), which entries into force on December 1st, 2014, repealing the eponymous law governing the matter published in the Official Gazette of the Bolivarian Republic of Venezuela Extraordinary N° 6,126 of February 19th, 2014.
Here are the most important aspects of the Law:
Administrative Authorities from the Foreign Exchange Regime
- The Ministry of Popular Power competent on the finance area is expressly incorporated (the «Ministry») as one of the administrative authorities of the foreign exchange administration regime, which shall act in coordination with the Sectorial Vice-Presidency with competence in the Economic Area, in all areas established by the Law and particularly in planning, conducting, articulation, coordination of national economic policy determining such purposes, the priorities of foreign currency, the policy for incentives, and control over the mechanisms administered by the competent authorities of the foreign exchange administration regime.
- The authority of the Ministry is set to designate the body or entity in charge that will have the control of inspection and audit control of the foreign exchange administration regime, which shall exercise the administrative sanctioning power.
Alternative Foreign Currency Market
- Remains the possibility that notwithstanding the access to the mechanisms administrated by the competent authorities of the foreign exchange administration regime, Individuals or Entities can acquire foreign currency through transactions in foreign currencies offered by (i) Individuals and Entities from the private sector; (ii) Petróleos de Venezuela, S.A. (“PDVSA”); and (iii) Central Bank of Venezuela («BCV»), subject to the terms set forth in the exchange agreements that will be issued for this effect and the regulations establishing requirements and conditions governing the participation in such markets.
- Consequently, the implementation of new mechanisms, other than those that are currently available, in order to conduct foreign exchange transactions in foreign currency requires the publication of new regulations.
Obligations to Declare
- Individuals or Entities importing, exporting, entering or leaving foreign currency to or from the territory of the Republic, for an amount higher than USD 10,000 or its equivalent in other currencies are required to declare the amount and nature of the operation before CENCOEX, without prejudice to the powers of the BCV.
- (i) Individuals or Entities acquiring securities issued by the Bolivarian Republic of Venezuela, which are subject to the provisions of foreign exchange regulations;(ii) non-resident individuals while in transit or tourism (less than 180 continuous days) acquiring foreign currency; (iii) the Republic, when acting throughout their bodies; (iv) PDVSA with respect to its special currency regime established in the BCV Law; (v) Entities incorporated or to be incorporated to develop any of the activities regarding the Hydrocarbons Law, within the limits of the applicable exchange agreement, are exempted from this obligation.
Foreign Exchange Crimes
- In addition to the existing foreign exchange crimes of (i) acquisition of foreign currency through deception and (ii) use of foreign currency for different purposes, the following are included: (iii) submitting false or forged documentation or information; and (iv) the promotion or stimulation to commit foreign exchange violations; however obtaining foreign currency in violation of the regulations established by the competent authorities of the foreign exchange administration regime is decriminalized, becoming an administrative infraction punishable with a fine, in addition to the repayment of such foreign currency to the BCV.
- The maximum penalty is increased to 7 years in prison, and fines are now expressed establishing the equivalent of 0.5 Tax Units («UT») that are in effect on the date of settlement, for every Dollar of the United States of America or its equivalent in another currency, the amount corresponding to the respective operation.
- Criminal penalties and fines are maintained for the concept of breaching the obligation to refund only if the amount to be reimbursed exceeds USD 50,000 or its equivalent in another currency. The lack of reimbursement of smaller amounts is subject to the imposition of administrative penalties and fines.
- The tax penalty remains applicable on Entities when their representation managers, officers, directors, employees or any other person acting on behalf of such Entities, using the Entity resources or by decision of its governing bodies, engage in any of the foreign violations crimes, however, the imprisonment penalty of 2 to 6years tax is eliminated.
Administrative Infractions
- A fine between 200 UT and 5,000 UT for failure to declare the confirmation of the origin of the foreign currency through a visible public notice remains.
- When the amount to be reimbursed is less than or equal to USD 50,000 or its equivalent in other currency, the penalty for breaching the repayment obligation is limited to a fine, besides the repayment of foreign currency to the BCV.
- A penalty and fine is imposed to those who breach the obligation to cooperate with the sanctioning administrative authority corresponding to foreign exchange matters.
Suspension of the User Registration System Administration of Foreign Exchange (“RUSAD”)
- Those who are convicted for committing foreign exchange violations and who are punished by an administrative offense established on the Law, will be suspended from RUSAD, by the time of the penalty imposed in the case of committing such crimes, and for a period of one continuous year, from the date on which the corresponding fine is paid, in the case of an administrative sanction.
Others
- Notices related to punitive administrative procedures regulated on the Law, made be carried out by electronic means, in addition to personal notification or posters. Notices made through electronic means, must be in compliance with the parameters established in the law governing the matter referred to data messages and electronic signatures.
- Statute of limitations for administrative infractions and the penalties established on the Law rises from 5 to 10 years.
This report presents a general description of the relevant and general aspects of the Law and does not constitute a legal opinion directed to address a specific situations. In case of doubts or comments or for further information please contact Juan José Delgado ([email protected]) or María Cecilia Rachadell ([email protected]).
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