Venezuela's National Assembly on Tuesday approved a new 33.3 percent tax on oil extraction that will mainly affect joint ventures involved in extracting heavy crude from the country's oil-rich Orinoco River basin.

Those joint ventures between the state oil company Petroleos de Venezuela (PDVSA) and its foreign partners, will have to pay an additional 16.7 percent royalty compared with their current levy of 16.6 percent.

The chamber, made up of 167 deputies, all from the ruling party, also agreed to boost income taxes for the Orinoco projects from 34 percent to 50 percent.

According to data from Venezuela's Energy Ministry, the world's fifth largest crude exporter, the new measures will bring in around 2 billion dollars annually.

The proposal will now go to President Hugo Chavez for his approval, and if passed, it will be published in the official gazette, which will turn the proposal into a law.

The tax revisions also allow companies, including France's Total, Norway's Statoil, three United States companies ConocoPhilips, Chevron and Exxon, and Britain's BP, to reduce their royalty payments to 20 percent if operations become unprofitable, which is unlikely with the current high oil prices.

Also, companies that pay oil royalties will be able to deduct royalties paid against tax.

The reform, requested by the Chavez government, is aimed at unifying taxes across industries. Venezuela's existing fossil fuel law taxes companies in general at 33 percent, but Orinoco Belt companies at only 16.6 percent. Orinoco belt companies have also been exempt from income tax but, with the revised tax law, they will now be aligned with all other companies.

The reforms are part of the Chavez government's "full petroleum sovereignty" campaign which has already re-written the 32 operating contracts agreed to with 22 international firms by the previous government in the 1990s.

Source: Xinhua