21 February 2013
The Partial Amendment of Decree N° 8,807 with Hierarchy and Force of Law creating Special contribution for Extraordinary Prices and Exorbitant Prices in the International Oil Market published in the official Gazette of the Bolivarian Republic of Venezuela N° 40,114 dated February 20, 2013, introduces the
following significant changes:
- Change the definition of “extraordinary prices”, which are defined as those whose average monthly of the international prices of the Venezuelan basket of liquid hydrocarbons, is higher than the price statedin the Budget Law of the respective fiscal year, but less than or equal to USD 80 (before USD 70).
- Change the definition of “exorbitant prices”, which are defined as those whose monthly average ofinternational prices of the Venezuelan basket of liquid hydrocarbons is higher than USD 80.
- The rate of the special tax for extraordinary prices remain unchanged (20%) and continues to applyto the difference between the price set in the Budget Law of the respective fiscal year and USD 80,increasing by USD 10 the taxable rate for the application of the rate for extraordinary prices rather than the rate applicable to the exorbitant prices.
- The applicable rate to the exorbitant prices remain unchanged; However, has been modified the ranges for exorbitant prices for the calculation of the contribution, as follows:
- 80% the total amount of the difference between the two prices, when exorbitant prices are higher than USD 80, but lower to USD 100.
- 90% the total amount of the difference between the two prices, when exorbitant prices are higherthan USD 100, but lower to USD 110.
- 95% the total amount of the difference between the two prices, when exorbitant prices are equalto or greater than USD 110.
- The following are exempting of compliance with the special contributions:
- The Joint Venture companies who perform the activities of hydrocarbons as a result of theimplementation of new development projects in reservoir.
- The volumes associated with recovery projects, “upgraded” or remediation projects orproduction, declared as such by the Ministry of the Popular Power with expertise in oil and mining.
- The exportation volumes related with the performance of International Agreements forcooperation or financing.
The applicability of the first 2 exempting are subject to the establishment of certain parameters, by resolution from the Ministry of the Popular Power with competence in oil and mining.
Any defenses apply even after recovering the entire investment in projects.
- It increases the price ceiling for the calculation and payment of Royalties, Extraction Tax and Export Tax Registration under the Hydrocarbon Organic Law, to the amount of USD 80 (before USD 70).
- Finally, the Law approved by the National Assembly repeals the Decree N° 8,807 with hierarchy, andForce of Law the Partial Reform of Decree with Force of Law to Create Special Contribution forExtraordinary Prices and Exorbitant Prices in the International Oil Market, dated February 23, 2012, published in the Official Gazette of the Bolivarian Republic of Venezuela N° 39,871 dated February 27, 2012, issued based on an Enabling Law. Also repealing the provisions of the Law of the Venezuelan Central Bank, sanctioned on April 8, 2010 and published in the Official Gazette of the BolivarianRepublic of Venezuela N° 39,419 dated May 07, 2010, regulating the funding of Petroleos de Venezuelato the Development National Fund (FONDEN) and any other disposal that conflicts with this Law.
Any additional information please contact: Gabriela Delgado Rachadell (gabriela.rachadell @ dlawordpress-1435814-5364031.cloudwaysapps.com) or Victor Orellana Martinelli (victor.orellana @ dlawordpress-1435814-5364031.cloudwaysapps.com).