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Venezuela Says Cemex Owes $37 Million in Back Taxes

August 15, 2008

CARACAS – Venezuela’s national tax agency notified the Mexican cement company Cemex that it must pay some $37.3 million after discovering that its taxes had not been paid in full for the tax years 2006 and 2007.

The customs and tax service said in a statement Monday that the Mexican cement company, which is in the process of negotiating its upcoming nationalization with the Venezuelan authorities, will have 15 working days to “present a new tax return and pay all or part of the amount in question.” If Cemex fails to respond by the deadline, it could face an additional fine, the Venezuelan government said.

After reviewing the company’s 2006 tax return, the tax agency considered “inadmissible” the expenditures and losses claimed for previous years and reductions of taxable income to compensate new investments by the company.

Tax officials also “objected to the same concepts” in the 2007 tax return, as well as others that were claimed, “such as an advance on withholding taxes and excess taxes paid in previous years,” which were “rejected for lack of proof” by the tax agency.

President Hugo Chávez announced April 3 the nationalization of the cement companies Cemex, French-owned Lafarge and Swiss-owned Holcim, and said he would pay for them “down to the last centavo.” These companies have until Dec. 31 to transfer to the state at least 60 percent of their shares, according to the nationalization decree concerning these companies published June 19 in the Official Gazette.

Of the more than 10 million metric tons of cement produced in Venezuela last year, Cemex contributed about half, while Lafarge and Holcim accounted for the other 50 percent, virtually in equal parts.

Despite the negotiations underway, Cemex-Venezuela announced in June that it had sold for $355 million the shares it owned in its subsidiaries on the French island of Guadeloupe and in Panama, the Dominican Republic and Trinidad and Tobago.

State-owned oil giant PDVSA, which forms part of the negotiating commission for the acquisition, objected to Cemex-Venezuela’s lack of consultation in taking its unilateral decision.

In Nicaragua, the Sandinista government has conducted similar pressure tactics to collect back taxes from transnational companies Esso and Hotel Barceló.

 

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