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Shell facing Tax Charges [Article]

  • 05-08-2005 3:40pm
    #1
    Thomond Pk
    Closed Accounts Posts: 449 ✭✭


    http://news.ft.com/cms/s/63cb9b0e-0519-11da-97da-00000e2511c8.html

    Shell to answer Venezuela tax charges

    By Andy Webb-Vidal in Caracas
    Published: August 4 2005 20:07 | Last updated: August 4 2005 20:07

    Royal Dutch Shell must on Friday answer allegations by Venezuela that it has failed to pay $130m in back taxes, a response that could have critical implications for several oil companies operating in the country.


    The tax claim on Shell forms part of a campaign led by President Hugo Chávez to tighten control over private oil companies, which pump about 40 per cent of the output from the world’s fifth-largest oil exporter.

    Mr Chávez and other officials have publicly claimed that multinationals owe as much as $3bn (€2.4bn, £1.7bn) in unpaid taxes, and in recent months Venezuela has increased tax and royalty rates on various types of oil ventures.

    “In the past the government had conducted negotiations with private oil operators behind closed doors,” said Patrick Esteruelas, Latin America analyst at Eurasia Group in New York.

    ‘‘By publicly accusing private oil companies of tax evasion they are being put up against the wall.’’

    Venezuela’s tax authority, known as Seniat, last month set a deadline of on Friday for Shell to formally respond to the demand for taxes allegedly unpaid between 2001 and 2004.

    Europe’s second-largest oil company has denied claims of tax evasion but it must on Friday say whether it will pay or potentially face a 250 per cent penalty.

    For Shell, Venezuela contributes only a fraction of its global oil production portfolio, and analysts say that the company may try to appease the authorities because it has other projects in the pipeline.

    Shell is hoping to construct a $3bn petrochemicals plant with Petroleos de Venezuela, the state-owned oil company, and is negotiating the terms of its participation in the $2.7bn Mariscal Sucre offshore natural gas project.

    But Shell’s response will set a precedent in the tax dispute with 22 foreign oil companies.

    For some the position adopted by Shell will be critical. Harvest Natural Resources, a small Houston-based oil company, has been given an August 12 deadline to formally answer an allegation by the Seniat that it owes $85m in unpaid taxes, a claim it also rejects.

    They seem to be rejecting a lot of claims lately


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