A bill recently introduced by the government contains more detail of the new tax regime in respect of oil companies. This aims to encourage further exploration with the aim of increasing oil production in the future. The state oil and gas company PEMEX which is important for Mexico’s revenue has seen falling production recently despite the existence of deep-water oil and gas reserves. PEMEX has been unable to fully exploit the opportunities owing to inadequate technology and funding. In future PEMEC will be allowed to be fully competitive and develop new areas of production in combination with private enterprises. According to the new Bill the tax burden on PEMEX is to be reduced over the next ten years from 79 percent of its income to a maximum of 65 percent. This reduction will be funded by the new tax revenue collected from oil production by private enterprises.
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