Weekly Report - 28 April 2011 (WR-11-17)

VENEZUELA | Tax on windfall oil profits. President Hugo Chávez passed a decree this week increasing the tax on windfall oil earnings to fund more social projects in the areas of housing, infrastructure, health, agriculture and food in the run-up to presidential elections in December 2012. Under the current regime, the state oil company Petróleos de Venezuela (Pdvsa) and private companies involved in oil production must transfer 60% of profits to the off-budget national development fund (Fonden) when the price of crude exceeds US$100 a barrel. The new decree imposes an 80% tax on income over US$70 a barrel; 90% over US$90 a barrel; and as much as 95% when oil is above US$100 a barrel. The oil minister, Rafael Ramí­rez, said the tax change would net the state more than US$16bn extra a year if the price were to remain at its current level of US$110 a barrel. He added that the changes would not affect new projects in the Orinoco oil belt.

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