Energy Reform - Chapter V: VAT Implications

1. Acts subject to 0% VAT rate

Article 33 of the LISH provides that acts or activities that cause VAT for which Considerations set forth in the Contracts for Exploration and Extraction of Hydrocarbons must be paid, shall be subject to the 0% rate for purposes of such tax.

This means that the several considerations that must be paid under such Contracts shall be subject to 0% rate. As a matter of fact, let us be reminded that pursuant to the provisions set forth in Article Transitory Fourth of the Decree for constitutional reform of the Energy Reform, and the LH and the LISH, provide the following regime for contractual considerations:

1. In cash, for Service Contracts.
2. A percentage of the profits, for Contracts of Shared Profits.