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Documents, Global Watchdogs, Government Expenditures, Taxes

@revenuewatch #Yemen case study (2008)

1- The total secrecy surrounding the production, extraction, exportation and refining of oil in the absence of any explanatory notes on how the state’s resources are being assessed in such an important sector. 2- Failure to give any clarifications is against international accounting standards and criteria on how to estimate revenues including transparency in extractive industries.

3- The absence of any explanations about the reasons behind reducing the amount or excluding the tax revenues of oil companies, and not confirming them by the concerned party, be it the companies or the Ministry of Oil.

4- The absence of any clarification on the reasons behind reducing oil production despite the withdrawal of Hunt, which was supposed to increase the share of Yemen after the expiration of Hunt’s contract on 31/12/2006 and its replacement by Safer company which is wholly owned by the Yemeni state. Besides, the share of Yemen oil from the Ma’rib field should have increased too because it became the entire property of the state (the latest production statistics show that when Hunt was still there, the production rate was 56 thousand barrels per day where Hunt was entitled to 35-40% of the production. But the opposite happened and the table above shows a 20% decline in Yemen’s share from 2006 to 2007).

5- The false reports on Yemen’s share of crude oil, which state that the Ministry of Oil has received 10.386.550 barrels from oil companies in return for an income tax, however this was not confirmed according to the report of the Central Control Agency in 2007.

6- The cost of oil largely increased from 5.10 dollars in 2004 to 16.34 in 2007, i.e.by 22.4% of the total crude oil; this shows the absence of any kind of control on the calculation of oil cost either before production or during the extraction (Report of the Central Control Agency in 2007).

7- Large exemptions of oil companies from custom duties, which deprives the Treasury of billions of riyals due to unfair agreements and bad exploitation of these exemptions by foreign firms and domestic subcontracting firms. These exemptions have reached more than 220 billion riyals in 2007, a very significant amount compared to the size of production and extraction activities.

Tax Revenues

1. Lack of transparency in all stages of budget preparation, implementation and even during budget control.

2. Tax burden ratio in 2007 was 6% and is falling dramatically by the year (i.e. tax revenues to GDP ratio), and if this figure was to be compared to countries like Yemen, the size of tax evasion would reach up to 16% of the GDP.

3. The ratio of tax revenues to the state-owned revenues in Yemen in 2006 in comparison to some Arab Countries is very small, only 18% while it reaches up to 87% in Tunisia, 74% in Lebanon, in Egypt (67%), Jordan (65%), and in Sudan (55%). This proves the extent of deficiencies in the performance of tax authorities as shown in the Report of the Central Agency of Control and Audit in the Balance Sheet of 2006 that was submitted to the Parliament (Audit Journal- Central Agency for Control and Audit p.46, issue 10 December 2007).

4. Yemen does not apply any of the standards of fiscal performance; actually, the cost of tax collection is amongst the highest in the world

And so much more …. this document is very in depth, and merits a thorough reading….

View this document on Scribd

About yemenexposed

Exposing the corruption in Yemen

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