Royal Dutch Shell Group .com Rotating Header Image Shell Succeeds In Appealing Venezuelan Tax Bill

By Mike Godfrey,
Washington 25 January 2006
After an appeal, Shell's retroactive tax bill in Venezuela for 2001-2004 has been cut to US$13m from US$130m. 22 companies had been assessed with more than US$650m in back taxes in total.
The government said that the companies had failed to comply with the terms of a 2001 law which imposed 16.6% royalties and 50% income tax on oil producers.
In mid-August, the authorities briefly shut down Shell's offices for 48 hours. Shell entered a new commercial agreement with state-owned Venezuelan oil company, PDVSA, last month, but it is not clear whether this has helped the company to obtain better treatment from the government.
It remains to be seen whether other companies are successful in appealing their assessments. Repsol, Petrobras, Japanese group Teikoku, and China National Petroleum Corp have signed similar agreements with PDVSA.
Last week, the head of Venezuela's tax agency revealed that foreign oil companies had so far 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.
Earlier in the mon th, the agency said it was considering widening its audit of the oil companies to cover years back as far as 1993.
Before Hugo Chavez took power in Venezuela, the government offered tax incentives to oil firms in order to encourage investment at a period when oil prices were relatively low. These policies have been sharply reversed under the new regime.
However, the government of President Hugo Chavez has begun to roll back these liberal policies and force foreign companies into joint ventures with the nationalised Petroleos de Venezuela.

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