Transactional Dollarization in Venezuela: Between Accounting Honesty and Fictitious Income Tax

Abstract

This paper analyzes the accounting, legal, and, fundamentally, fiscal consequences stemming from the dysfunction of the bolívar and the de facto dollarization of the Venezuelan economy. It posits the technical and legal viability of adopting the dollar as a functional currency and its fiscal consequences. The article explores in depth the complex tax treatment that arises from this reality, focusing on the determination of Income Tax (ISLR). It critically examines the treatment of exchange gains and losses, especially after the exclusion of “special taxpayers” from the fiscal inflation adjustment system, which generates severe distortions such as the taxation of fictitious gains and the non-recognition of real losses. Alternatives are proposed for the valuation of the tax base that more fairly and effectively reflect the actual tax ability to pay in an anomalous monetary environment. The use of stablecoins, particularly USDT (Tether), is discussed as an instrument for executing transactions in an environment of incomplete banking services and restricted access to conventional foreign currency transfer mechanisms.