Decree of Redenomination of the Monetary System Unit
Decree No. 3.332, issued by the Presidency of the Republic, was published in Official Gazette No. 41.366 of March 22, 2018 (the “Decree”). Said Decree establishes that the unit of the monetary system of the Bolivarian Republic of Venezuela will be redenominated as from June 4, 2018. Therefore, all amounts expressed in national currency before said date must be converted to the new unit, by dividing by one thousand (1000). The bolivar resulting from the redenomination will continue to be represented by the symbol “Bs.” and be divisible by one hundred (100) cents.
The Decree provides that by reason of the currency redenomination, the obligations in national currency must be incurred in the redenominated bolivar and after June 4, 2018, they will be settled through the delivery, as per their nominal value, of the monetary symbols representing it. Likewise, as from the aforesaid date, any operation or reference expressed in national currency (prices, salaries, and other obligations of a labor nature, taxes, other sums contained in financial statements or other accounting documents or in credit instruments) must be expressed as per the redenominated bolivar.
As to the expressions in national currency contained in instruments, legal acts or transactions entered into up to June 3, 2018, which maintain their legal effects after said date, the Decree establishes that they will be understood to be automatically redenominated after June 4, 2018. Therefore, there will be no need to execute or enter into new instruments or carry out any formality whatsoever.
The Decree empowers the Venezuelan Central Bank (VCB) to regulate, through Resolutions, all matters related to the execution of the currency redenomination, including all matters in connection with the rounding to be applied as a consequence of the redenomination, and to carry out all the activities leading to putting the new bills and currencies into circulation. The VCB may also penalize, pursuant to article 135 of the Decree with the Status, Value, and Force of Law of the Venezuelan Central Bank, those who refuse to make the redenomination or fail to perform any obligation contained in the Decree.
In addition, the National Superintendence for the Defense of Socioeconomic Rights (Superintendencia Nacional para la Defensa de los Derechos Socioeconómicos - SUNDDE) is empowered to receive and process all denunciations and complaints deriving from the breach of any of the provisions of the Decree, except that because of the nature of such breach, the cognizance and processing of the same are entrusted to another supervising or controlling entity.
The activities or operations that constitute a taxable event of the value added tax (VAT) and that are to be performed for the production and distribution of the new bills and coins to be issued by the VCB, as well as the sale of goods, provision of services, and imports necessary for the manufacturing of said bills and coins, including the services related to the putting into circulation of the same, and those necessary for the formulation and execution of the disseminating strategy to be carried out by the VCB and the entities of the public sector, are exempt from payment of said tax. Also, the net income obtained by the persons that provide goods and services intended exclusively for the complete execution of the currency redenomination process established in the Decree are exempt from income tax (IT).
The Decree prescribes that after June 4, 2018, the bills and coins issued by the VCB that are representative of the monetary unit being redenominated under the same will be demonetized.
As from May 1, 2018 and until a Resolution of the VCB provides otherwise, all instruments offering prices of goods and services, as well as other instruments expressing monetary amounts, will use in their reference both the account unit prior to the redenomination and that resulting from the redenomination. The new unit will be designated with the expression “Bolívares Soberanos” (“Sovereign Bolivars”) or the symbol “Bs.S.”.
Finally, the Decree establishes that the expressions in national currency contained in laws, regulations, decrees, resolutions, rulings, circular letters, instruments or administrative acts with effects for all individuals and/or with effects for a specific group of individuals only, as well as in judicial decisions, negotiable instruments, or other documents with legal effects that have been issued and/or entered into effect, as the case may be, before June 4, 2018, must be converted according to the equivalence contained in the Decree.
Also, the official paper, fiscal stamps, revenue stamps and/or postage stamps, as well as any other stamp valued in current bolivars, must be used until exhausted and the value of the same, as from June 4, 2018, must be understood in accordance with the equivalence established in the Decree.
The Decree became effective upon publication in the Official Gazette.
In order to access the Decree, 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.”