Decree with the Status, Value, and Force of Law on the Exchange Regime and its Unlawful Acts

Contact: Travieso Evans Arria Rengel & Paz (Venezuela)

The  Decree with the Status, Value, and Force of Law on the Exchange Regime and its Unlawful Acts (hereinafter the “Decree”)  was issued through Decree No. 798, published in Official Gazette  No. 6.126, Extraordinary, dated February 19, 2014. The purpose of the Decree is to regulate the terms and conditions under which the entities with jurisdiction over the foreign currency administration regime exercise the powers conferred on them, as well as the fundamental parameters for the participation of individuals/private parties and public entities in the acquisition of foreign currency and the events that constitute unlawful acts in this matter.

The Decree establishes that the National Center of Foreign Trade (Centro Nacional de Comercio Exterior - “CENCOEX”)  will control and award, through the mechanisms administered by the same, the foreign currency intended to cover the expenses of the public authorities and to satisfy the essential needs of the community (goods and services declared to be essential goods and services).

In addition to the mechanisms administered by CENCOEX, the Decree establishes that the natural or legal persons requiring foreign currency may acquire it through transactions in foreign currency offered by: (i) natural and legal persons of the private sector (ii) Petróleos de Venezuela S.A. and (iii) the Venezuelan Central Bank (“VCB”). Said transactions will be carried out in the terms of the Exchange Agreements to that end issued by the VCB and the National Executive and in accordance with the regulations for developing said Exchange Agreements that establish the terms, requirements, and conditions governing the participation in said market and with the prudential rules issued by the Superintendence with competence over banking and securities matters.

The Decree establishes the obligation to declare the importation and exportation of foreign currency if the amount exceeds US$10,000. Also the exportation of goods and services in excess of US$10.000 is to be declared to the VCB and information must be provided about the characteristics of each transaction.

The following are foreign-exchange-related unlawful acts according to the Decree: (i) acquisition of foreign currency by deceit, (ii) use of foreign currency for purposes other than those for which the request for the same was made,  (iii) obtainment of foreign currency in violation of the relevant procedures, and (iv)  failure to perform the obligation to refund to the VCB the foreign currency lawfully obtained within a period of fifteen (15) days following the date on which the order to refund becomes final.

The penalizing regime of the Decree prescribes that the individuals/entities that fail to perform the obligation to exhibit in their premises an announcement, visible to the public, indicating the goods and services offered in said commercial establishment that were acquired with foreign currency authorized by CENCOEX will be penalized with fines ranging between 200 Tax Units and 5.000 Tax Units.

Also, the penalizing regime provides for the possibility of penalizing the alleged violator by suspending him/it from the Registry of Users of the Foreign Currency Administration System (Registro de Usuarios del Sistema de Administración de Divisas).

Also, the legal persons will be penalized with a fine of double the amount of the transaction, in the equivalent in Bolivars, when the managers, administrators, directors, or subordinates, acting on their behalf, using the company’s resources, or by decision of their governing entities, commit any of the unlawful acts prescribed in the Decree.

The Decree repeals the Decree with the Status, Value, and Force of Law against Foreign Exchange Crimes   published in Official Gazette No. 6.117, Extraordinary, dated December 4, 2013. All regulatory  provisions contravening the provisions of the Decree are also repealed.

The suppression and liquidation of the Foreign Currency Administration Commission (Comisión de Administración de Divisas -  “CADIVI”) is ordered as from the entry into force of the Decree.

The Decree removed the prohibition against offering goods and services in foreign currency contained in the repealed Law against Foreign Exchange Crimes.

The Decree became effective upon its publication in the Official Gazette.

In order to access the Decree, please click here.