Venezuela Could Bill Oil Cos Up To $326M for 2005 Taxes

CARACAS Oct 10, 2006 (Dow Jones Newswires)

Venezuela could bill private oil firms up to $326 million for taxes that went unpaid last year, the latest round of fines in an industry-wide audit, a Seniat tax agency official said Tuesday.

The audit includes 22 oil companies that won oil field operating agreements during three licensing rounds in the 1990s, and tax officials have already billed half of the companies a total of $255.8 million, said Jose Joaquin Cedillo, head of the Seniat's special tax contributions office.

Last year the Seniat billed the same companies roughly $700 million for taxes that went unpaid from 2001 through 2004.

The Seniat has accused these firms of paying a discounted income tax rate and inflating tax deductions, among other irregularities.

"We didn't expect to bill these companies for unpaid taxes in 2005, we thought they already knew how we work," Cedillo told reporters.

In the 1990s a previous, business-friendly administration lured foreign oil investment during a period of low oil prices by offering discounted tax rates.

The administration of President Hugo Chavez has argued those contracts are illegal, and decided last year to fine the companies for underpaying taxes.

Cedillo also noted that Seniat officials have decided to postpone an audit of the extra-heavy oil partnerships along the Orinoco River belt until they work out new contract agreements with the government.

Venezuela's oil partners in the Orinoco region include oil majors such as Exxon Mobil Corp. (XOM) and ConocoPhillips (COP) that operate joint ventures with state firm Petroleos de Venezuela SA.

Copyright (c) 2006 Dow Jones & Company, Inc.


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