Venezuelan Tax Agency Coins It From Foreign Oil Firms

by Mike Godfrey, Tax-News.com, Washington

19 January 2006

The head of Venezuela's tax agency revealed on Monday that foreign oil companies paid $125.6 million in back taxes last year as a result of the country's widespread audit of overseas firms operating in the nation's oil industry.

According to the Associated Press, Jose Vielma Mora head of Seniat, the tax agency, has said that the government expected to collect "as much as 1.4 trillion bolivar (US$651 million)" by the end of its review.

The agency says it is still owed another 1.13 trillion bolivars (US$525.6 million) by the companies for the period from 2001 to 2004.

However, the final total may be far in excess of this figure if the agency extends the tax probe of companies operating in 32 oil fields as far back as 1993, as reports indicated last month.

The tax agency Seniat is claiming that oil firms have been misinterpreting the nation's corporate tax laws since the early 1990s when the country's oil fields were opened up to private investment, and have been paying tax at a rate of 34% instead of the 50% rate demanded from firms operating in the oil industry.

To date, 19 of the 22 companies which are party to operating agreements have been notified of unpaid taxes totalling $891 million, and an additional three notifications are expected from the Senate during January, the AP reported.

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