Tax Uncertainty: New Hydrocarbon Law under the Microscope

By Riccardo Indacochea, Iver Von Borries and Alonson Indacochea

On March 21 2005 the Bolivian Senate again considered the controversial Hydrocarbon Law, which has divided the country in half and was a key reason behind President Carlos D Mesa's decision to submit his resignation to Congress (although it was not accepted).

The excessive non-deductible taxes proposed by the law, as well as the threat of expensive lawsuits by foreign and national oil companies against the government, have been two major factors in the president's refusal to approve the law (which has already been passed by the Representatives Chamber).

The oil companies have rejected the proposed law for the following reasons: