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Venezuela approves new tax on oil profits
Venezuela's National AssemblyCARACAS
Petroleumworld.com, April 16, 2008
Venezuela approved Tuesday a new oil tax to take advantage of the new sky high oil prices designing a tax that will cut into windfall company oil profits, when prices of Brent crude oil tops $70 a barrel.The new tax will ta 50 percent additional tax on oil companies excess income when the average monthly price for benchmark Brent oil tops $70 a barrel. The tax rate would rise to 60 percent when exceeded $100, according to the bill approved by Venezuela’s National Assembly. The legislation will take effect as soon as it is published in the official gazette.
" We did not want to pass an expropriation law on these companies. The idea is not to cause them losses," the minister of Energy Rafael Ramirez said
Venezuelan president Hugo Chavez on Sunday urged the National Assembly to pass the tax, saying that each day the measure lingered meant millions of dollars less in social spending.
" For each week that goes by the treasury loses 150 million dollars for social programs," the Venezuelan leader said.
The tax could reap up to 1.2 billion dollars this year for a national development fund managed by Chavez.
Think of it as "special contribution" from oil companies operating in Venezuela amid soaring oil prices, deputy Luis Tascon said.
PDVSA contributed 6.7 billion dollars to the fund in 2007, Minister of Energy and PDVSA President Rafael Ramirez said Tuesday.
The new "mandatory contribution" will be levied only on income over 70 dollars a barrel, officials said.
Chavez also said the extra billion dollars per year that the new tax would bring in would help the government nationalize three cement-making firms from Mexico, France and Switzerland, as well as an Argentine steel firm, turning them into "real socialist companies."
Oil prices struck a series of new highs Tuesday, with New York crude crossing 114 dollars a barrel, while Brent North Sea crude for May struck its own record intra day high, at 112.08 dollars a barrel.
Venezuela, a member of OPEC, is Latin America's leading oil producer -- and the world's ninth most productive -- with an estimated 100 billion barrels of crude oil reserves.See: New tax law on oil profits (Spanish)
Story from Petroleumworld
Petroleumworld 15 04 08
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