Tax Cap Slows Pemex Finance | The Sharpener

MEXICO CITY ? Petroleos Mexicanos (Pemex) reported a loss of 88.400 billion pesos for the cap imposed by the Ministry of Finance ?when deducting production costs, labor or raw material.

This impact is greater than that of labor liabilities or LP gas subsidy for 2011.

?If it costs $ 20 Pemex produce a barrel, but the Treasury only allows you to deduct 6.5 dollars, the difference between the tax bases is what it recognizes as an impact,? said Luis Miguel Labardini, a partner at Mark & ??Associates, a consulting firm specializing in the oil sector in Mexico.

Pemex reported production costs of 5.22 U.S. dollars per barrel on average, while its exploration and development costs resulted from 12.84 dollars in 2010.

The deductible amount was higher by other economic impacts that occurred during 2011 as the 40.000 million pesos related to the gas subsidy, and the 86.700 million pesos by the labor liabilities in 2011, according to the report of the fourth quarter of the parastatal.

Pemex tax ??paid 876.015 million pesos in 2011 , a record for the parastatal, which accounted for 56% of its sales and 128.5% of its operating income, excluding cost of sales.

The expert said that Pemex has a deductibility limit depending on the area where additional oil, and unlike private companies can not ask not to have taxes withheld on all production costs.

?If there are more companies exploiting oil, the rate would drop because of deductibility should be more reasonable,? he explained.

The limit on deductibility for extraction in Chicontepec is $ 11 per barrel to U.S. dollars 16.5 deep, and 6.5 U.S. dollars for other fields, said Labardini.

The Treasury estimates do not reflect production problems, or the fees charged for services are increasing worldwide.

?Some would ask Pemex more efficient to reduce costs, but in many cases these are legitimate,? said Labardini.

However, lower this limit would be a waste of resources for the Government, which have not yet raised, added the specialist.

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Source: http://www.thesharpener.net/tax-cap-slows-pemex-finance/

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