Oil Firms Accused of Venezuela Tax Evasion

[FaGal]

Oil Firms Accused of Venezuela Tax Evasion
www.forbes.com - May 6, 2005


Many oil companies operating in Venezuela have failed to pay large amounts of taxes, and the government may charge some companies retroactively, President Hugo Chavez said.

He said there has been "massive evasion" by both foreign and Venezuelan companies, and that some have declared losses to avoid paying taxes.

"The billing in this case could be retroactive," Chavez said Friday in a televised speech, referring to a recent tax increase.

Last month, the government adjusted the tax rate on 32 oil operating agreements to 50 percent, up from 34 percent, saying the oil firms were paying a cheap industrial rate.

Chavez didn't mention any specific companies, but said the problem of tax evasion applied to many of the oil firms in Venezuela.

He said the 50 percent rate was "fair," and that tax authorities may have to begin calculating the amount oil firms avoided paying in the past.

"They were paying (a rate) as if it were an electrical product," Chavez said.

He also said there has been a "campaign" of false information about the state oil company Petroleos de Venezuela S.A. since the announcement of the tax increase.

Chavez held up several folders, saying they were the result of government intelligence overseas to recover past agreements with oil companies in which Venezuela's interests suffered.

He also said Venezuela's oil production is at 3.3 million barrels a day and that officials aim to reach 3.4 million barrels a day this year.

Independent analysts say Venezuela, the world's fifth largest oil exporting country, actually produces about 2.6 million barrels a day.