Mexico's government this year will introduce petroleum tax reforms that will transform how its state owned petroleum company approaches capital spending. Effective Jan. 1, 1994, the Mexican government began to implement a revamped tax regime designed to accompany the breakup of Petroleos Mexicanos into four new operating subsidiaries. Each of the four new companies Pemex Exploration & Production, Pemex Refining, Pemex Natural Gas & Basic Petrochemicals, and Pemex Secondary Petrochemicals will be responsible for paying a new income tax. Levies on E&P will be tied to a ringfence mechanism tailored after the scheme employed by the U...

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