Venezuela to Reform Oil Tax System

Venezuela's Congress is seeking to approve reforms within two weeks that would boost income tax on four multibillion dollar foreign-backed oil projects from 34 to 50 per cent, a legislator said.

Under the leadership of President Hugo Chavez, Venezuela's government is seeking to boost revenues from energy operations in the world's No. 5 oil exporter amid a regionwide surge in natural resource nationalism.

"The most time that could pass is two weeks," Cabezas told Reuters in a telephone interview. "I agree with the idea ... of passing it as quickly as possible."

Venezuela's Seniat tax authority earlier this year proposed the measure, which would create a special oil industry chapter of the income tax law requiring 50 per cent tax on all oil projects.

This would hike taxes on four projects in the Orinoco Belt, which produce around 620,000 barrels per day (bpd) of extra heavy crude and upgrade it into synthetic oil that can be processed by traditional refineries.

A group of joint ventures that PDVSA signed earlier this year would not be affected because their agreements already establish the 50 per cent tax.