Philadelphia, January 2, 2018 (venezuelanalysis.com) – Venezuela’s National Constituent Assembly (ANC) approved last week a new tax law regulating the country’s Orinoco Mining Arc.

Known as the Tributary Regime Law for the Development of the Mining Arc, the legislation establishes tax brackets for mixed enterprises participating in the mega-mining project.

The Orinoco Mining Arc is a 111 square kilometer region in the southeastern Amazonian state of Bolivar that President Maduro decreed in 2016 as a special economic zone for mining in partnership with scores of national and transnational firms.

According to AVN, Article I of the new law requires the Venezuelan state to retain a minimum stake of 55 percent in all mixed companies operating in the Orinoco Mining Arc with the aim of preserving national sovereignty.

Under Article II of the legislation, the state will establish three different tax rates for participating firms depending on their annual output of gold: 16,000 kilograms or more, between 1,600 and 16,000 kilograms, and less than 1,600 kilograms.

However, the law specifies that the actual tax rates applied in the different categories will be determined by the national executive.

The fourth article of the bill establishes a tax on gold exports to be paid in international currency or its equivalent in gold, though the rate has yet to be announced.

Additionally, the legislation authorizes the president to grant partial or total tax exemptions. The conditions for exonerations have not yet been made public.

Speaking last Wednesday, ANC Vice-President Aristobulo Isturiz praised the law as an “exercise of sovereignty” aimed at freeing the county from its century-long dependence on oil extraction.

“It’s an act that allows us to lead the country, just how President Maduro planned, towards the conformation of a post-oil and post-rentier economy,” he declared.

The socialist party leader also claimed the law would protect indigenous and environmental rights.

“In addition to propelling economic development, this law allows us to preserve our greatest environmental patrimony and guarantee the rights of our indigenous peoples, farmers, and small miners,” he added.

Despite a government decree banning mercury and pledges to consult indigenous communities on all projects, the Orinoco Mining Arc has faced opposition from social movements concerned over the social and ecological fallout from the mega-mining initiative.

Pointing to the widely documented health and environmental repercussions of open-pit gold mining, the Ye’Kwana and Sanema indigenous peoples issued a statement in 2016, declaring the Mining Arc a “violation of our legitimate right to health, our own safeguarded territory and quality of life”.

Meanwhile, other critics have objected to the initiative’s lack of transparency, noting that none of the multi-billion dollar agreements signed with private firms have been made public.

The Venezuelan government, for its part, has defended the Mining Arc as an opportunity to reign in illegal gold mining, which is largely controlled by criminal groups and has had a grave social and environmental impact on the region.

Last week, Ecological Mining Minister Victor Cano announced 24 strategic alliances between the state-run Venezuelan Mining Corporation and small mining groups.