Organic Law on Fair Prices
The Decree with the Status, Value, and Force of Organic Law on Fair Prices (the “Decree-Law”), issued by the President of the Republic, was published in Official Gazette No. 40,340 of January 23, 2014. The purpose of the Decree-Law is to assure the development of national economy by determining fair prices of goods and services, through the analysis of cost structures, the fixation of the maximum profit percentage, and the effective auditing of the economic and commercial activity, with the purpose of protecting the citizens’ income and access by the individuals to goods and services for the satisfaction of their needs, and of establishing the administrative-law-related unlawful acts, in order for the consolidation of the Socialist productive economic order.
The national or foreign, natural and legal persons of public or private law that develop economic activities in the national territory, including the activities performed by electronic means, will be subject to the Decree-Law. The individuals/entities subject to the Decree-Law must be registered with and keep their data current at the Single Registry of Persons that Develop Economic Activities (Registro Único de Personas que Desarrollan Actividades Económicas - “RUPDAE”). The registration is an essential requirement in order to be able to carry out economic and commercial activities in the country. After the RUPDAE has become operative, the natural and legal persons subject to the application of the Decree-Law will be allowed a period of 180 days to be registered. During said period of time, they will continue to exercise their economic activity.
The foreign currency awarded by the competent authority in the frame of the foreign currency administration regime will be strictly supervised and controlled in order to assure compliance with the purpose and use for which the foreign currency was requested and awarded. The individuals/entities that are awarded foreign currency for any of the activities set forth in the Decree-Law must execute a faithful performance agreement that will contain the obligation to strictly comply with the purpose and use for which the foreign currency was requested and the consequences in the event of default. The goods acquired or produced with foreign currency granted by the Republic must be identified by a label.
The determination, modification, and control of prices are of the competence of the National Superintendence for Defense of Socioeconomic Rights (Superintendencia Nacional para la Defensa de los Derechos Socio Económicos - “SUNDDE”). In this connection, the SUNDDE will establish a categorization of goods and services or of individuals/entities, pursuant to the technical criteria that it deems convenient and it may establish different regimes for regulated, controlled or not controlled, goods and services, according to the strategic character of the same and for the benefit and protection of the persons that access them. The SUNDDE may, on the basis of the information provided by those subject to the Decree-Law, proceed to determine the fair price of the good or service or modify the same. The costs and expenses informed to the SUNDDE may not exceed the reasonable costs registered in the accounts.
The maximum profit margin will be established on an annual basis, according to scientific criteria, by the SUNDDE, taking into consideration the recommendations issued by the Ministries with competence over commerce, industry and finance matters. In no case will the profit margin of each participant in the commercialization chain exceed 30 percentage points of the cost structure of the good or service. The SUNDDE may determine maximum profit margins per sector, line of business, geographical space, commercialization channel, economic activity, or any other item that it may consider, without such margins exceeding the maximum established.
The Decree-Law suppresses the Superintendence of Fair Costs and Prices (Superintendencia de Costos y Precios Justos - “SUNDECOP”) and the Institute for Defense of the Individuals in the Access to Goods and Services (Instituto para la Defensa de las Personas en el Acceso a los Bienes y Servicios - “INDEPABIS”). The procedural acts brought during the operation of SUNDECOP and INDEPABIS remain fully valid; the provisions of the Decree-Law must be immediately applied to the rest of the stages of the procedures in progress.
The fair prices implemented by the President of the Republic will remain in force until the SUNDDE determines the price according to the current rules. The lease rentals of commercial premises will be established by a Decree of the President of the Republic, as per the SUNDDE’s recommendations, until the SUNDDE establishes the criteria for fixing the same.
The National Executive may commence expropriating procedures when economic and administrative-law related unlawful acts prescribed in the National Constitution and the Decree-Law have been committed. The State may adopt measures of temporary occupation and seizure of goods during the expropriating proceeding. Likewise, the SUNDDE may impose fines ranging from 200 Tax Units to 50,000 Tax Units; temporarily suspend the RUPDAE from 3 months to 10 years; issue measures of temporary occupation with intervention of warehouses, storehouses, industries, commercial establishments, transport of goods, for up to 180 days; temporarily shut down warehouses, storehouses or establishments used for commerce, preservation, storage, production, or processing of goods for up to 180 days, or close them down; confiscate goods; revoke licenses, permits, or authorizations and, specially, those related to the access to foreign currency. The Decree-Law establishes penalties ranging between 1 and 14 years of imprisonment if the commercial unlawful acts established in the same are committed.
The Decree-Law repeals the Law of Fair Costs and Prices, published in Official Gazette No. 39,715 of July 18, 2011 and the Law for Defense of Individuals in the Access to Goods and Services published in Official Gazette No. 39,358 of February 1, 2010. The Decree-Law became effective upon its publication in the Official Gazette of the Bolivarian Republic of Venezuela. The National Executive will issue the regulations to the Decree-Law within 180 days following its entry into force.
In order to access the Decree-Law, please click here.
“NOTE: THIS INFORMATION SHOULD NOT BE CONSTRUED AS LEGAL ADVICE ON ANY SPECIFIC MATTER AND ITS CONTENT ARE INTENDED AS A MANAGEMENT ALERT AS TO CURRENT DEVELOPMENTS IN VENEZUELA, ANY SPECIFIC LEGAL QUESTIONS REGARDING THE POSSIBLE APPLICATION OF NEW OR PROPOSED LEGISLATION TO PARTICULAR SITUATIONS SHOULD BE ADDRESSED TO TRAVIESO EVANS ARRIA RENGEL & PAZ.”