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05/09/2005:

"Venezuela Seeks Taxes From Oil Companies"

CARACAS, Venezuela, May 8 (AP) - President Hugo Chávez said Sunday that foreign oil companies working in the country must pay taxes he insists that they owe, or else leave.

During his Sunday television and radio show, Mr. Chávez said that many private companies had been evading taxes for years. Tax officials have said that many declare losses to avoid paying income tax.

The announcement appeared to be the latest move by Venezuela to put more pressure on foreign oil companies. Last month, the oil minister, Rafael Ramírez, announced that private oil companies operating in the country would have to convert to joint ventures with the government within six months, potentially bringing a substantial amount of new revenue to Venezuela. Mr. Ramírez also announced that the country's tax collection agency was investigating possible tax evasion by the companies, estimating that they may owe $2 billion in unpaid taxes since 2000.

Venezuela opened its oil industry to foreign oil companies in the 1990's. During that time, 32 operating agreements were signed with companies like ChevronTexaco, British Petroleum, Total, Petrobras, Repsol YPF, Royal Dutch/Shell and the China National Petroleum Corporation.

According to Venezuelan law, oil companies usually must pay a 30 percent royalty on what they produce in the country. But companies producing heavy crude, which is expensive to produce, were allowed to pay a 1 percent royalty until last year, when the government raised it to 16 percent.
Full:nytimes.com