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Despite a great income year, Venezuela fails to attain goals on new hydrocarbons taxes
Reuters
DUBAI
Petroleumworld.com 03 13 07In 2006, Venezuela's Ministry of Energy and Mines failed to collect USD 3.86 billion, in new taxes levy on oil and gas companies.
The sulfur royalties on heavy-crude oil enhancing projects disposing of or exporting sulfur tax, other taxes on hydrocarbon byproducts, gas royalties, royalties on the heavy-crude oil used to produce orimulsion, and newly created tax on oil extraction.Other taxes whose collection goal was not met are gasoline general and domestic consumption tax.
The estimations of failed taxes is in the order of USD 3.86 billion, out of which more than USD 2.33 correspond to uncollected tax royalties.
However, 2006 will be known in history as the year when Venezuela introduced the most significant changes in the laws governing oil businesses in the country.
The income tax levied on crude oil extraction operations at the heavy-crude oil Orinoco strip was increased from 34 percent to 50 percent. The Organic Law on Hydrocarbons was reformed to include two new taxes, namely tax on oil extraction and export. The National Assembly okayed new imposts for oil joint ventures, which involves payment of 33.33 percent royalties. And on top of that, profit margins in the domestic market were adjusted by cutting a tax on gasoline consumption.
Virtually all of these moves resulted in positive results for the Venezuelan Treasury in absolute terms, as tax collection by the Ministry of Energy and Petroleum -ranging from crude oil and gas royalties to the surface tax levied on idle hydrocarbon areas- soared some 53 percent, from USD 12.27 billion to USD 18.7 billion, and is expected to jump USD 20.9 billion if taxes standing at the end of 2006 are collected.
Such an increase is almost fully attributable to a higher payment of crude oil royalties, both by state-run oil giant PDVSA and the private firms having a stake in this sector, namely operational agreements turned into joint ventures and strategic partnerships operating at the Orinoco strip.
PDVSA paid the Treasury USD 15.3 billion, compared to a goal of USD 7.2 billion. Private companies paid the Treasury USD 1.35 billion, versus a goal of USD 680.39 million.
Petroleumworld 12 03 07
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