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Forbes: Venezuela Tax Agency Closes Shell Office

Forbes: Venezuela Tax Agency Closes Shell Office

“Shell has decided to challenge a US$130 million (euro104.8 million) claim for unpaid taxes in Venezuela, and the tax agency has said Shell will lose out if the case goes to court.”:

Posted Friday 12 August 2005

Associated Press

Venezuela’s tax agency has ordered a two-day closing of Royal Dutch Shell PLC’s office in the western city of Maracaibo amid a tax audit, the company said.

The company’s oil production in Venezuela has not been affected, as only around 150 employees at the Maracaibo office have been affected by the move, company spokeswoman Bettina Steinhold said.

“Our main production platform is still working,” she said, adding that Shell’s offices in the capital of Caracas were still open.

Shell has decided to challenge a US$130 million (euro104.8 million) claim for unpaid taxes in Venezuela, and the tax agency has said Shell will lose out if the case goes to court.

Shell was the first of 22 oil companies with operating contracts to pump oil that has received a bill for allegedly underpaying on taxes.

The Venezuelan tax agency says the original contracts for these firms set a preferential rate that violates the nation’s tax code, and is charging the difference back to 2001.

Venezuela has the largest conventional oil reserves outside the Middle East and is the world’s No. 5 oil exporters.

President Hugo Chavez’s government has been seeking to exert greater control over the industry, saying that in the past poor Venezuelans didn’t see enough benefit from oil proceeds.

The government has increased tax rates and is now signing joint-venture agreements to take majority stakes in oil fields that foreign firms until now have operated independently under contract.

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