In brief
The Central Bank of Venezuela (BCV) issued Resolution No. 21-08-01 of 6 August 2021, containing the Regulations Governing the New Monetary Expression (“Resolution“)1. The Resolution entered into force on 16 August 2021. However, the new monetary expression will apply as of 1 October 2021.
The purpose of the Resolution is to regulate the aspects related to the new monetary scale, set forth by Decree No. 4,553 of 6 August 2021, which decreed the new monetary expression (“Decree“)2.
Individuals and public and private entities are obliged to perform the corresponding amendments in their computer systems (data, data structures, programs, routines, screens, input and output reports of information, sending and receiving messages, among others) before 1 October 2021, so they have the capacity to process operations that imply reference to the national currency in the new monetary scale.
Key Items
Most relevant aspects of the Resolution:
1. General rules on expression and rounding.
- To express amounts on the new scale, the amount must be divided by 1,000,000. Any fraction resulting from the new monetary scale established in the Decree, whose third decimal of the value expressed in the new scale is lower than five, will retain the first two decimals of the value in the new expression.
- If the third decimal of the value expressed in the new scale is greater than or equal to five, then the second decimal must increase by one unit. This rounding will apply only once, so the corresponding value expressed in the new scale reflects two decimals.
- In the case of those products whose quantity may be fractional, rounding will apply to the result of multiplying the quantity of the monetary product by its unit price.
2. Expression of the price of goods and services and monetary amounts. The expression of the price of goods and services and monetary amounts in the new scale, detailed below, will also be converted by dividing said price or unit value by 1,000,000. However, the decimals resulting from such operation must be reflected as follows:
- The price of the following goods and services must reflect at least two decimals, notwithstanding that they may reflect a greater number of decimals: (i) Fuels for automotive use; (ii) Liquefied petroleum gas; (iii) Water, electricity, urban cleaning, domestic gas, telephone and internet services; (iv) Metro and Metrobus tickets; (v) Postal shipments within the country; (vi) Tax units; (vii) Balances of active or passive operations in the national financial system; as well as the balances of commercial credits; (viii) Shares, even when they are not listed on the stock market, as well as participation quotas and other negotiable securities; and (ix) Rates and other public prices.
- Exchange rates must reflect the number of decimals corresponding to each currency, as published by the BCV on its website.
3. Labor benefits. Basic wages and salaries, as well as pensions, retirements and other work benefits as of 30 September 2021, must be adjusted as follows as of 1 October 2021:
- If the third decimal of the value expressed in the new monetary scale is equal to zero, the first two decimals of that value will remain.
- If the third decimal of the value expressed in the new monetary scale is different from zero, then the second decimal of the value expressed in the new monetary scale must increase by one unit.
4. Sanctions and taxes. The determination and settlement of sanctions and/or taxes established in tax units will be calculated based on the general rules set forth in item 1 of this section.
5. Co-circulation of monetary species. As of 1 October 2021, banknotes issued by the BCV representative of the current monetary unit, with denominations equal to and greater than VEB 10,000, may continue to circulate with releasing power until the BCV demonetizes them in accordance with the resolution that the BCV issues for such purposes. Likewise, as of such date, banknotes and metallic coins with denominations of less than VEB 10,000, may be deposited with the banking institutions of the financial system, until the date determined by the Board of the BCV; however, they will not be mandatorily accepted for the purpose of releasing pecuniary obligations.
6. Display of the prices of goods and services.
- As of 1 September 2021, and until the BCV decides otherwise, the price of goods and services must be published and displayed both in the new monetary scale and in the previous account unit. Likewise, the price in VEB of the value of the shares that are listed on the stock market must be expressed in the new monetary scale, following the same expression and rounding rules provided in item 2 (a) of this section for shares, as long as they are offered through means other than computing systems.
- If as of 1 October 2021, there are goods still for sale that have the price marked exclusively in VEB in the body of the product, said price will be understood automatically expressed in the new monetary scale by dividing it by 1,000,000.
- The obligation to express the price of goods and services both in current VEB and in the new scale does not apply to legal instruments or businesses that generate legal effects and that are subject to registration or authentication before the different registries and notaries. In the event that those documents –that depend on the Autonomous Service of Registries and Notaries (SAREN) and are granted as of 1 October 2021 –contain references or quotations of historical numbers, they may be reflected using the old account unit, in addition to the account unit in the new monetary expression.
7. Statistical publications. As of 1 October 2021, publications that have statistical, accounting or similar content may include a note indicating that they express monetary amounts in the new monetary scale. If a comparison of statistical, accounting or similar information is required, and in order to standardize it, the monetary amounts or values contained in publications issued prior to 1 October 2021 must be divided by 1,000,000, or the monetary amounts or values contained in publications issued after 1 October 2021 must be multiplied by 1,000,000.
8. Preparation and filing of financial statements. The preparation and filing of the financial statements corresponding to fiscal years ended before 1 October 2021, whose approval is made after that date, must be carried out in current VEB, in accordance with the Venezuelan Generally Accepted Accounting Principles (VEN-NIF). For the purposes of comparison with subsequent years, the accounting balances of said financial statements will express the new monetary scale. The balances of auxiliary and regular accounts corresponding to fiscal years ended before 1 October 2021 must be converted to VEB in the new monetary scale, in order to be used as initial balances for the following periods. The financial statements referring to accounting closings finalized as of 1 October 2021, as well as any comparative information must be prepared and presented in VEB in the new monetary scale.
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1 V. Resolution No. 21-08-01 of 6 August 2021 (published in Official Gazette No. 454.269 of 16 August 2021).
2 V. Decree No. 4,553 of 6 August 2021 (published in Official Gazette No. 42,185 of 6 August 2021). V. Background: “Venezuela: New decree of monetary expression effective as of 1 October 2021” in Nuevo decreto de expresión monetaria vigente a partir del 1 de octubre de 2021 (bakerxchange.com) (available in English).
