Venezuela cuts back-tax claim on Shell

Venezuela's tax authority Seniat reduced Royal Dutch Shell PLC's back-tax bill by 90% in a surprise move that raises hopes of a more conciliatory attitude toward international oil companies (IOCs).

Jan. 25, 2006

Peter Howard Wertheim
OGJ Correspondent

RIO DE JANEIRO, Jan. 25 -- Venezuela's tax authority Seniat reduced Royal Dutch Shell PLC's back-tax bill by 90% in a surprise move that raises hopes of a more conciliatory attitude toward international oil companies (IOCs).

Shell now has to pay $13 million in taxes alleged to have been unpaid between 2001 and 2004. The firm presented a strong cache of documentary evidence to Seniat.

Total SA late last year negotiated a $1 billion tax claim down to $20 million.

Meanwhile, Energy Minister Rafael Ramirez is to propose another tax hike later this year.

Under discussion is an increase in the income tax rate to 50% from 34% on four heavy-oil projects in the Orinoco area, potentially affecting ExxonMobil Corp., Chevron Corp., ConocoPhillips, BP PLC, Total SA, and Statoil ASA.