Yesterday, OFAC published the following FAQ regarding the definition of “profit” under Executive Order 13808 for the Venezuela sanctions program:
527. What does OFAC consider to be “profit” under Subsection 1(a)(iv) of E.O. 13808?
For purposes of Subsection 1(a)(iv) of E.O. 13808, “profit” is net income after taxes. For a business, this is generally total sales minus total costs and expenses. For example, transactions involving the Government of Venezuela, including PDVSA, related to payments for goods and services, taxes, or royalties are not considered “profit.” Similarly, principal and interest payments related to bonds and promissory notes are not considered “distributions of profit” for purposes of Subsection 1(a)(iv) of E.O. 13808, and so that subsection does not prohibit U.S. persons from making such payments. Restrictions imposed under other subsections of E.O. 13808, however, may still apply. For example, pursuant to Subsection 1(a)(iii), U.S. persons are prohibited from dealing in principal and interest payments related to bonds that were issued by the Government of Venezuela before August 25, 2017 unless U.S. persons are authorized to deal in the relevant bonds under General License 3. [10/03/2017]