U.S.-based oil company Harvest Natural Resources Inc. has been evading Venezuelan taxes for years and must pay a $94 million claim or face legal repercussions, Venezuela's tax chief said Tuesday.

Harvest was the second of 22 oil companies with operating contracts to get a retroactive bill. Royal Dutch Shell PLC was the first, but Vielma Mora did not say if Shell has decided to pay its $131 million claim.

Venezuela awarded the operating contracts in the 1990s in an effort to increase production at older oil fields.

The contracts set a preferential 34 percent income tax rate as an investment incentive, compared with standard 50 percent rate for oil activities. The tax agency says the 34 percent rate violated national law, and is charging the difference back to 2001.

Venezuela is also requiring that companies with operating contracts convert them into joint ventures in which state-owned Petroleos de Venezuela S.A. will hold a majority stake.

President Hugo Chavez fully backs the oil tax audit, and last week urged oil companies to "pay what they owe."

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http://www.businessweek.com/ap/financialnews/D8BNTPMO0.htm?campaign_id=apn_home_down&chan=db

Ex Post Facto... Is it right for a government to change the the rules today and pretend it was done four years ago?

For example, if the Supreme Court suddenly finds legislation criminalizing abortion passed back in the 60's constitutional, can a retired abortion technician be charged?

8/3/2005 10:22:27 AM

Robert Mugabe probably agrees.

8/3/2005 12:31:53 PM

No it's not right, but since he's the President of a sovereign nation with a bunch of military and paramilitary forces backing him, he can do whatever he wants in Venezuela.

8/3/2005 1:23:42 PM

I dunno... The companies in question seem to be capable of seeking international arbitration. As such, Venezuela probably signed away its right to "do anything" when it signed the agreement.

I figured there would be at least one person on this board which would argue in favor of Chavez, not just defend his right to tyranny, which I agree is probably not assailable.

[Edited on August 3, 2005 at 1:30 PM. Reason : .]

8/3/2005 1:29:57 PM