Ministry studies new IDH tax distribution proposal

Wednesday, August 31, 2005

Bolivia's economy ministry is analyzing a proposal to increase the distribution of taxes paid to departments, municipalities and state universities from the hydrocarbons sector to 60% from 40%, government news service ABI reported.

The country's new hydrocarbons law stipulates that foreign oil companies must pay 32% taxes on all production but it does not say how the money will be distributed, a spokesperson at the mining and hydrocarbons ministry told BNamericas.

The law "outlines a certain tax distribution but neither the universities nor the municipalities were contemplated," he said.

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According to the country's "popular participation" legislation, both municipalities and universities should receive a portion of all national taxes. The tax in question is known as the direct hydrocarbons tax, or IDH by its Spanish acronym.

Tax payments are not restricted to hydrocarbons producing departments and municipalities, whereas the majority of royalty payments go solely to producing departments, the spokesperson added.

Bolivia is expected to receive some US$417mn this year from IDH payments, ABI reported.


New statutes must be established for state oil firm YPFB before contract migration conversations can begin with foreign oil companies.

YPFB will work out contract models that will be used in the migration process once its board approves the statutes, the spokesperson said.

The new statutes, which were originally scheduled to be approved on Tuesday, will be approved in the upcoming days, he added.

Foreign oil companies operating in Bolivia hold a total of 72 joint venture contracts, all of which need to be reviewed and approved by congress to ensure they are in accordance with the new law.

The deadline for contract migration is November 15, 180 days after the new hydrocarbons law was approved in May.