Venezuelan lawmakers give initial nod to oil tax reforms

Caracas (Platts)--10May2006

Venezuelan lawmakers Wednesday gave initial approval to reforms of the
Hydrocarbons Law that includes a 0.1% tax on oil exports as well as a new rate
for royalties, the National Assembly said in a statement. Final approval is
expected on Thursday. The reforms include a universal royalty rate of 33.3%
for all oil operations in Venezuela, or twice the current rate of 16.7% paid
by extra heavy crude projects, as announced by President Hugo Chavez Sunday.
But the changes will also add a new export registration tax of 0.1%, "a
very modest levy, conceived not to increase tax revenue, but to strengthen
fiscal control over exports," according to the text of the reform. "The vendor
will inform the Energy Ministry of the volume, the API, sulfur content and
destination of the shipment before it leaves port," reads the text of the
reform. The vendor then has 45 days to present the contract of sale and proof
of payment of the export registration tax to the ministry.
In addition to the taxes, the reform package makes minor changes to the
wording of the 2001 Hydrocarbons Law to distinguish its provisions from the
Natural Gas Law. Under the changes all remaining uses of the word "bitumen"
are replaced by "heavy oil" and details are included on the constitution of
mixed companies where the state holds majority control.
Following Wednesday's approval of the reforms by the legislature's energy
and mines commission, the plenary chamber, which is made up entirely of
pro-Chavez lawmakers, is expected to give the changes their final approval on
Thursday. The reforms will then come into force once they is published in the
government's official gazette.
--Steve Ixer, newsdesk@platts.com


 

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