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London Evening Standard: Venezuela hits Shell with £74m bill for back tax

London Evening Standard: Venezuela hits Shell with £74m bill for back tax

“The Venezuelan authorities said Shell now faces a 15-day deadline for handing over the funds said to be owed. If it pays up within that period, interest on the sum allegedly owed will be charged at 10%. If not, the rate will rise to 250%.”

Posted Sunday 17 July 2005

Published by The London Evening Standard on Friday 15 JULY 2005

HARD on the heels of news that Royal Dutch Shell faces a massive cost overrun on its flagship Sakhalin-2 project in Russia, the company has been caught up in a tax wrangle with the Venezuelan authorities, writes Jake Lloyd-Smith.

The South American country’s tax authority has said the energy giant owes $131 million (£74.5 million) in back tax for the years from 2001 to 2004.

Shell reportedly rebuffed the claim, saying it had met all its Venezuelan tax obligations.

The claim and counter-claim come after months of deteriorating relations between the left-wing government of President Hugo Chavez and many of the oil majors that work the country’s fields.

Opec member Venezuela is the world’s fifth-largest crude exporter, and Chavez has repeatedly accused Western companies of cheating it out of some of the wealth that flows from its wells, prompting officials to take an increasingly hard line against them.

As Shell found itself parrying the back-tax claim, investigators from the national tax bureau were said to have confiscated financial data from US energy group Chevron.

The Venezuelan authorities said Shell now faces a 15-day deadline for handing over the funds said to be owed.

If it pays up within that period, interest on the sum allegedly owed will be charged at 10%. If not, the rate will rise to 250%.

Shell was not immediately available for comment today

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