File No. 812.6363/275
[Inclosure—Translation]
decree dated april 13, 1917, establishing the
rates of taxation for petroleum and its products
Venustiano Carranza, First Chief of the Constitutionalist Army, in
charge of the Executive Power of the Nation, in the exercise of the
faculties with which I am invested; and whereas the production of
petroleum in the country should, because of the great development
reached in recent years, constitute a source of income for the
Federal Treasury which may bear a just relation to the great profits
which companies or enterprises dealing in petroleum obtain from this
industry; and whereas it is expedient to exempt from the special
stamp tax the petroleum which is consumed in the country for the
purpose of aiding industry by furnishing an abundant and economical
source of combustible; and whereas the quality of petroleum produced
in the country varies greatly and should therefore, in order that it
may be taxed reasonably and equitably, bear a tax based on the
different commercial values fixed in conformity with the variation
in quality; and whereas a considerable quantity of this liquid is
wasted because due precautions are not taken in exploration work and
in its daily handling, this circumstance causing frequent losses not
only to the interested companies but also to the Treasury for taxes
not received; therefore
I have seen fit to issue the following decree:
Article I. All crude petroleum of domestic production, its
derivatives and the gas from the wells, from the moment that they
may leave the fields or tanks, will be subject to a special stamp
tax, as follows:
A. All crude petroleum of domestic production as well as fuel not
intended for domestic consumption will be taxed according to the
following tariff:
Fuel oil will be taxed ten per cent ad valorem
per net ton. The valuation of this oil will be considered as pesos
9.50 when its specific gravity is 0.910, this valuation decreasing
by twenty centavos per ton for each one-hundredth increase in
specific gravity and oil whose specific gravity is 0.970 being
included in this variation.
[Page 1066]
The valuation of fuel oil, the specific gravity of which may be less
than 0.910, will increase by forty centavos for each one-hundredth
decrease in specific gravity.
The valuation of all petroleum of which the density is greater than
0.970 is fixed at pesos 7.50.
Crude petroleum will be taxed ten per cent per net ton on its
valuation; which shall be considered as pesos 14.00 when its
specific gravity is 0.910, this valuation decreasing in the same
manner as fuel oil as the specific gravity increases to 0.970.
Fuel oil intended for the use of tug-boats and tank steamers in the
export service will be subject to the foregoing tariff.
The products derived from refining crude petroleum and from the use
of the gas of the wells not used for domestic consumption will be
taxed according to the following tariff:
Refined gasoline, one-half centavo per liter;
Crude gasoline, one centavo per liters;
Crude kerosene, one-half centavo per liter;
Refined kerosene, one-fourth centavo per liter;
Lubricants, one-fourth centavo per liter;
Asphalt, pesos 1.50 per ton;
Gas, five per cent ad valorem.
B. Crude petroleum and its derivatives, when wasted in any quantity,
either through carelessness or noncompliance with Government
regulations, will be taxed double the amount of similar
products.
Products derived from natural gas when wasted for the same reasons
will be taxed ten per cent of their commercial value.
Article II. The special stamp tax will not apply, except the tax on
sales in accordance with the law of June 1, 1906, to the
following:
A. All crude petroleum of domestic consumption, whether sold in the
country or used in exploration or development work of the companies
in the fields or terminals; that which is delivered to the
refineries of the country for refining or for use as fuel oil; that
used by steamers or tugs in the coastwise trade; and, in general all
crude petroleum of domestic production used in any form within the
country.
B. All the products derived from crude petroleum of domestic
production, whatever may be their denomination or physical state,
which are sold or used within the country, provided they have been
refined in the refineries of the country, in the fields or terminals
of the companies, whatever may be the process employed.
Article III. For the purposes of the present decree crude petroleum
is understood to be the natural product as it comes from the wells
or springs, provided that it does not contain more than one per cent
of water or sediment. Should it contain more, the excess over one
per cent will be deducted when the tax payments are made.
Refined petroleums are understood to be all the solid or liquid
products of crude petroleum, whatever may be the treatment employed,
either mechanical, physical or chemical, which results in the
separation of one or more of the substances which comprise the
original product. The operation of separating the water from
petroleum is excepted, provided that this is done without the
application of heat and without the separation of the component
parts of the crude petroleum.
Crude gasoline is the distillate corresponding to this product which
has not received any treatment of redistillation or purification by
acid or alkali. Crude kerosene is the distillate which corresponds
to this product which has not undergone any treatment of
redistillation and purification with acid or alkali. Refined
gasoline and kerosene are those which have received the treatment of
redistillation and purification with acid and alkali.
Fuel oils are understood to be the liquid products of a crude
petroleum or mixtures of petroleums from which certain oils have
been separated to reduce the ignition point. Fuel oils are
comprehended in the denomination of refined petroleums, a special
classification being made, however, for the purposes of the tax.
Article IV. In order to be able to fix the tax which according to
Section A of Article I corresponds to each one of the derivatives of
petroleum, the Ministry of Hacienda will issue a bimonthly statement
of the above-mentioned articles fixing the prices in the ports of
lading, taking the average valuation of these articles for the
previous month. The manifests or invoices presented by the [Page 1067] companies covering
domestic sales of these articles will be made the basis for the
statement referred to. In case that no domestic sales have taken
place the average valuation taken will be that of these articles in
New York or in other ports of the United States during the previous
month, deducting the cost of transporting the products referred to
from the Mexican ports to the foreign ports. In case that sufficient
data for making the foregoing calculation are not available, a price
will be fixed equal to that which similar products may have in the
United States, this price being the basis of the tax.
Article V. All moneys which come to the Treasury as the result of
compliance with this decree must be paid only in national (Mexican)
gold coin.
transitory
Article I. All laws, regulations and dispositions which contravene
the present decree are declared null and void.
Article II. This decree will take effect from May 1, 1917.
Therefore, I order that it be printed [etc.]
Constitution and Reforms
Mexico City,
April 13,
1917.
