Venezuela raises taxes, fees to offset 30% oil revenue drop

Venezuela is increasing taxes and public service charges on private businesses to compensate for a predicted 30 per cent decline in oil revenue following tighter US sanctions, business leaders and analysts say.

The US revoked export licenses for firms like Chevron and imposed secondary sanctions on buyers of state oil company PDVSA’s crude, cutting the OPEC member’s oil income from about $15 billion in 2024.

In response, President Nicolás Maduro’s government has intensified tax collection, demanding advance payments, audits, fines, and allowing local authorities to raise fees sharply. Tax revenue rose by around 20 per cent in the first quarter after Maduro declared an economic emergency in April and removed tax exemptions.

A May survey by Conindustria found 77 per cent of businesses see taxes as their biggest hurdle, with 60 per cent planning no or minimal production growth. Larger companies do not expect to add jobs, while medium firms anticipate a 1 per cent workforce reduction.

Inflation, which ended 2024 at 48 per cent, is forecast to reach 200 per cent by 2025 as rising taxes and service costs squeeze working capital and force some businesses to close. Analysts estimate companies are now paying up to half their earnings in taxes, with total collections possibly hitting $13 billion this year.

Attribution: Reuters
Subediting: M. S. Salama