Venezuela Plans New 'Sudden Gains' Oil Tax Soon

Venezuela plans a new tax on foreign oil companies of 20%-25% on what the government deems to be "sudden gains" from strong fluctuations in world oil prices, a lawmaker said Wednesday.

"The tax will be anywhere between 20% and 25% of what we deem sudden gains," lawmaker Iroshima Bravo told Dow Jones Newswires. "We're studying various examples of the tax, and this should be ready soon."

Bravo heads a team of lawmakers in charge of studying the application of similar tax rates in other countries. Once a proposal is ready, President Hugo Chavez could use his special presidential powers to pass a hydrocarbons industry law reform that includes the new tax, Bravo said.

Bravo didn't give specifics on what the government defines as sudden gains, but said the government is still studying a specific formula for calculating the gains that will be taxed in the future. The proposed new tax would come on top of existing taxes the foreign companies already pay.

Passing the new tax change is a priority, she added, "because we must take advantage of the current atmosphere of rising oil prices."

Chavez first announced his administration was pondering the new tax a few weeks ago, but he didn't offer any specifics.

Under his administration, foreign companies have faced higher taxes, higher royalty payments and even nationalization of key oil ventures in the crude-rich Orinoco basin.

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