Venezuela shutters local US businesses

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Venezuela's tax authority on Thursday ordered the temporary closure of the local offices of IBM and Microsoft for alleged tax irregularities.

Nokia, Ericsson and Siemens, as well as car part maker Bosch Rexroth and assembler Honda Motor, were also told to close for 24 to 48 hours.

The targeting of top western multinationals as part of a “zero tax evasion” policy is a further sign of an increasingly assertive behaviour by President Hugo Chávez, as bountiful oil revenues strengthen his leftwing government.

Seniat, Venezuela's tax collection agency, said the companies would be fined several hundred dollars for alleged irregularities in book-keeping.

Mr Chavez has set as one of his government's aims the reversal of a historic and widespread culture of non-payment of taxes in oil-rich Venezuela. Like many of the top officials in the Chavez administration, the tax agency's chief inspector is a former army captain seen as very close to the president and who is feared by some and admired by others for his no-nonsense efficiency and zeal.

Microsoft's alleged misdemeanour, according to a lawyer familiar with the company, was to have committed the “crime” of incorrectly filling in one of the boxes on a requisite value-added tax form.

IBM and Microsoft's local offices declined to comment on Thursday.

Antonio Herrera, general manager of the US-Venezuelan chamber of commerce, said the temporary closure notices served to IBM and other multinationals aimed to convey the idea that no-one was exempt.

“The Seniat has been striving with differing degrees of precision to establish a tax-paying culture in Venezuela, and one of the ways tax authorities establish their authority is by instilling the fear of God into tax-payers,” said Mr Herrera.

Several oil multinationals have recently been asked to pay hundreds of millions of dollars the government says they owe in back taxes.

Some in the oil industry believe the “zero tolerance” is being used to extract higher royalty rates and, in some cases, convert existing operating contracts into state-majority joint ventures.

In recent weeks, Mr Chavez has stepped up a land redistribution programme, including the expropriation of large rural estates and some assets belonging to large agribusinesses. The government said on Thursday it intended to take over as many as 50 large estates this year.

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