(Reuters) - The Venezuelan government is increasing taxes and public services charges for the private sector to compensate for the decline in oil revenues after U.S. sanctions are tightening.
Washington canceled key licenses in February for a few partners and customers of national oil company PDVSA, including Chevron, that allow them to export Venezuelan oil under U.S. sanctions exemption. It also imposes secondary tariffs on oil buyers in Venezuela.
Analysts estimate that the actions could reduce oil revenues from OPEC members, which is about $15 billion in 2024, or about 30%.
More than a dozen businessmen said the expected loss of income has led the government to demand early taxation, conduct more audits, impose large fines and allow local authorities and public service providers to raise fees. These measures have increased the pressure on the private sector with years of economic crises, high inflation and monetary control.
Neither the Ministry of Communications, the Ministry of Finance nor the tax authorities responded to requests for comment.
President Nicolas Maduro, who issued an economic emergency in April to allow him to remove tax exemptions, had asked officials in January to double tax revenue from $5.2 billion last year. Officials are listening to the phone – tax revenue rose about a fifth in the first quarter.
Maduro's administration has been rejecting U.S. sanctions, calling them an "economic war."
Businessmen have held meetings with the government to make some tax revisions, three sources said.
A May survey of the Industry Guild interface, which represents producers of food, chemicals, plastics and textiles, found that 77% of merchants determined that the tax burden was a major obstacle to their operations. In the following months, about 60% of those surveyed had virtually no plans increased.
"Any additional tax will come from working capital," said Luigi Pisella, president of Conindustria, adding that the tax base must be expanded to avoid focusing the burden on existing businesses.
"Those who can manage this adverse environment will be those who can manage this adverse environment," said an industrialist who asked not to be named.
Lifeguard
Ruling MP Jose Vielma cheers on the increased tax collection.
"It is possible to alleviate the tough economic moments," Velma told Reuters. "We have to thank the private sector, which has contributed enough."
Analysts are more outspoken.
"Taxes are lifeguards for the government," said Luis Barcelona, an economist at the Venezuelan firm Ecoanalitica. The company estimates that taxes could be as high as $13 billion this year, with the company spending half of its revenue on taxes.
The Conindustria survey shows that larger businesses do not increase jobs, while mid-sized companies say they can reduce their workforce by about 1%.
"When you don't have working capital, you stop creating jobs," said a businessman.
Some sources, especially those in the retail industry, said they are closing stores with lower sales.
"When customers pay for the product, they are paying for most of the taxes paid by the merchant," said a businessman from central Venezuela.
Local manufacturers tend to own factories in more than one municipality, meaning that a few international companies in Venezuela impose their local taxes compared to the few remaining international companies in Venezuela, which are imported products or limited domestic factories.
"For locally produced companies, the impact is even more important," said the director of a foreign company who asked not to be named.
Public services that are prone to power outages are heavily subsidized when oil revenues are generous, but prices have more than doubled as of March, according to the Venezuelan Financial Observatory.
Inflation was 48% last year and is expected to reach 200% by the end of 2025.
(Reuters report; editors of Christian Perenz and Nia Williams)