May 20, 2005
Oil firms willing to pay tax increase in Venezuela

(AP Worldstream) - "Many oil firms, both foreign and domestic, working in Venezuela are willing to pay a forthcoming 16 percent tax increase planned by the government of President Hugo Chávez, a top tax authority said.

Oil companies are bracing for more taxes as the government has said they will now be required to pay 50 percent income tax amid record oil prices instead of a preferential 34 percent tax rate currently in place.

José Joaquín Cedillo, a representative of the Seniat tax agency, was quoted by the local El Universal daily as saying that oil companies working under 16 of the 32 operating agreements with the state-run oil firm Petróleos de Venezuela S.A. are willing to accept the tax hike.

'Oil companies working under 16 agreements have said that they want to establish a path for the adjustment,' Cedillo said.

When the contracts were signed in the 1990s, oil firms were registered as contracted help for PDVSA, making them eligible for a low industrial tax rate.

Venezuela's oil minister recently said Seniat will strip them of that lower rate.

Firms with contracts to produce oil for PDVSA include ChevronTexaco, British Petroleum, Spain's Repsol, Royal Dutch Shell and China National Petroleum Corp (...)".