Venezuela: Amended hydrocarbons law introduces new tax framework
Changes to hydrocarbons sector tax regime, including new taxes, repealed levies, and expanded exemptions
A law amending the Organic Hydrocarbons Law was published in Official Gazette No. 6,978 Extraordinary on January 29, 2026, representing one of the most significant changes to the sector’s regulatory framework. The law aims to create a more flexible, competitive, and attractive environment for private and foreign investment.
The law introduces new forms of association and new mechanisms for management and oversight, maintaining state ownership of hydrocarbons while allowing for greater private-sector participation. It also establishes a more competitive fiscal regime designed to encourage investment, with relevant changes to the sector’s tax framework including:
- Royalties: The state’s right to collect royalties on extracted and non-reinjected hydrocarbons was maintained, with a participation rate of up to 30%. The specific percentage will be determined by the National Executive for each project.
- Integrated hydrocarbons tax: A new integrated hydrocarbons tax will be calculated on monthly gross revenues, with a rate of up to 15%, adjustable on a project-by-project basis.
- Repealed taxes: Various taxes established under the previous hydrocarbons law and other special laws applicable to the sector were repealed include:
- Surface tax
- Own consumption tax
- General consumption tax
- Extraction tax
- Export registration tax
- Windfall tax
- Shadow tax
- Exemptions: The law provides exemptions from state and municipal taxes, as well as from the social responsibility obligations established under the Public Procurement Law and from the payment of the following taxes and contributions:
- Net worth tax
- Special contribution established in the organic law on science, technology and innovation
- Special contribution established in organic law on sports, physical activity and physical education
- Special contribution established in the organic law on drugs
- Contribution established in the law for the protection of social security pensions
- Executive authority to adjust tax rates: It is possible for the National Executive to reduce the rates of the income tax, the integrated hydrocarbons tax, and the royalty percentage, subject to the opinion of the Ministry responsible for hydrocarbons, whenever such reduction is necessary to ensure the economic balance of the project.
- Withholding and collection agents: State-owned companies and their subsidiaries will act as withholding or collection agents for royalties and the integrated hydrocarbons tax applicable to contracts for the development of primary activities.
- Effective date: This partial reform of the organic hydrocarbons law will come into effect upon its publication in the Official Gazette, that is, on January 29, 2026, except for the provisions creating the integrated hydrocarbons tax and the exemptions mentioned above, which will enter into force 60 consecutive days after its publication.
For more information, contact a KPMG tax professional in Venezuela:
Alessandra Montagna | amontagna@kpmg.com
Karla Vivo | kdvivo@kpmg.com
Alejandro Gomez | adgomez@kpmg.com
Alejandro Rangel | alejandrorangel@kpmg.com