The Fiscal Regimes, tax rates and other levies on hydrocarbons vary greatly between countries. In many cases they vary widely even on a state by state basis or even on specific assets. Other times certain assets will have a fiscal regime or a production sharing agreement (PSC) at lower levels due to historic reasons, while those assets which are the result of more recent licensing rounds are likely to be on a far less generous offering from the government. Evaluate Energy tracks and aggregates the Fiscal Regimes and oil and gas fiscal models of countries worldwide, below is a cut down example of the type of information offered to our subscribers and provides a brief Oil & Gas Fiscal Regimes Comparison. Full subscribers have full access to all the data at no extra cost.
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| Country | Primary Fiscal Model | Fiscal Overview |
| Algeria | Concession | Algeria’s fiscal regime is a concessionary system which includes numerous taxes including royalty payments, surface tax, CIT, petroleum income tax and windfall profits tax. Operators must work in partnership with the national oil company Sonatrach (Entreprise Nationale Sonatrach, which will have at least a 51% participation) and ALNAFT (Agence nationale pour la valorisation des ressources en hydrocarbure, responsible for the promotion, evaluation and concluding of contracts and collecting royalties). There is also a regulatory body ARH (L’Agence Nationale de Contrôle et de Régulation des Activités dans le domaine des Hydrocarbures). |
| Angola | Hybrid | Production sharing contracts are the most common form of contract in Angola. The state concessionaire is Sonangol. PSA and concession holders are not liable to any other Angolan taxes except those relating to petroleum activity. Assessment of taxable income is independent (ring-fenced) for each area covered by the PSA except, usually, for exploration expenditure. |
| Argentina | Concession | Argentina is organised into federal provincial and municipal governments and the fiscal regime that applies to the petroleum industry is mainly the federal and provincial regime. Federal taxes include income tax, VAT, minimum presumed income tax, personal assets tax, tax on debits and credits in checking accounts, custom duties and social security taxes. Provincial taxes imposed on the upstream (not downstream) oil industry are turnover tax, stamp tax and royalties. Activities carried out in Tierra del Fuego are exempt from corporate income tax, VAT and Minimum presumed income tax. Local crude prices are regulated by the government and must not exceed $42 per barrel. Export prices are based on WTI less export tax. |
| Australia | Concession | The basic structure of petroleum taxation in Australia is a combination of corporate income tax and either a petroleum resource rent tax (PRRT) or a royalty-based tax. |
| Azerbaijan | Production Sharing Contract | The country’s tax regime consists of a combination of production sharing agreements (PSAs) and host Government agreements (HGAs), the terms of which have been individually negotiated. A draft law on the fiscal regime has been presented to the Azeri parliament but has not been ratified and it is unknown when it will be. At any rate, the new law would not apply to existing PSAs or HGAs. All exploration and production activities are based on PSAs and are managed by SOCAR while oil and gas pipelines (Baku-Tiblisi-Ceyhan) and the South Caucasus Pipeline are governed by HGAs. |
| Brazil | Hybrid | Brazil’s fiscal regime for the oil and gas industry consists of a combination of corporate income tax, Government and some third party takes. |
| Cambodia | Production Sharing Contract | Cambodia’s fiscal regime is in the early stages of development and the Petroleum Regulation, 1991 (which was a PSC type) is viewed as out of date The draft Petroleum Law anticipates PSCs made up of income tax (30%), bonuses, royalties, cost recovery and profit sharing. |
| Cameroon | Production Sharing Contract | Cameroon’s fiscal regime for the oil and gas industry is impacted by Cameroon’s Tax Code, Petroleum Code and the PSC or Concession Agreement. There would appear to be scope for difference in fiscal terms between different PSCs and Concessions. |
| Canada | Concession | The fiscal regime is a blend of royalties (10% to 45%) and income taxes. Both Provincial and Federal authorities are involved. For 2011 Federal CIT will be 16.5% and Provincial CIT will be 10% in Alberta and BC, 11.5% in the Northwest Territories, 12% in Manitoba and Saskchewan and 14% in Newfoundland & Labrador. |
| Chad | Concession | Concessionary system based on royalty (12.5% for oil, 5% gas)), taxes (50% CIT) and bonuses. |
| China | Production Sharing Contract | China’s fiscal regime is mainly based on PSCs and involves windfall levies when oil prices are above $40 per bbl., royalties (0-12.5%), corporate income tax (25%) and bonuses. |
| Colombia | Concession | Colombia’s fiscal regime is a combination of corporate income tax and royalty base taxation. Colombia has fiscal stability contracts to protect investors for 3 to 20 years against adverse changes in laws, regulations and rulings (the cost is 1% of the investment during the year). There are foreign exchange controls (an exemption may be applied for by an oil E&P company or a technical service company working in the area). |
| Democratic Republic of Congo | Concession | The fiscal regime in the Democratic Republic of the Congo (Congo Kinshasa, the former Zaire) is a concessionary one based on royalties and corporate income tax. |
| Denmark | Concession | The fiscal regime is a combination of corporate income tax and hydrocarbon tax rates. Hydrocarbon tax rates differ between licences granted before or after January 1, 2004. |
| Ecuador | Service Contract | Until August 2010 Ecuador’s fiscal regime was a mix of a variety of contracts including joint, shared management and service contracts with a windfall profits tax. In August the government required all PSCs to be re-negotiated into Risk Service Contracts. The government also looks favourably on fee-for-service arrangements. Given the one sided nature of the negotiations some companies left (e.g. Petrobras and Noble) while others (e.g. Repsol) decided to stay even though the expected share of the government’s take will move from 70% to 80%. |
| Egypt | Production Sharing Contract | Egypt’s fiscal regime comprises income (40.55%) and royalty (10%) based taxation. The Petroleum Concession Agreement signed with the Egyptian Petroleum Corporation (EGPC) is the basic document used. Subject to foreign exchange shortages, there are no restriction on repatriation of profits. |
| Equatorial Guinea | Production Sharing Contract | The fiscal regime is a mixture of royalties (minimum 13% escalating with volume), corporate income tax (35%) plus bonuses, surface rents and share of profit oil stipulated in the PSC. The tax code of October 28, 2004 and the Hydrocarbon law Number 8/2006 of November 3, 2006 apply. |
| Ethiopia | Hybrid | Ethiopia uses a model production sharing agreement or a concession contract between the government (represented by the Minister of Mines) and the contractor. Royalties, surface rents, income tax and bonuses are the prime components of the system. |
| Falkland Islands | Hybrid | The Falklands fiscal system comprises a variable acreage rental; a 9% royalty on production and a 26% corporation tax on profits. |
| Gabon | Hybrid | The fiscal regime comprises corporate taxation (35% to 73%), annual surface rents, signature and production bonuses, and royalties (6% to 12%) on production. |
| Ghana | Concession | Ghana operates a royalty/tax fiscal regime. The Internal Revenue Act (IRA, which applies mainly to downstream activities), the Petroleum Income Tax Law (PITL, under review) and the Petroleum Agreement (PA) apply. The PA is usually an agreement between the oil company and the Ghana National Petroleum Company (GNPC) and the Ghana government (GOG). With the discovery of commercial quantities of oil, the incentive for GOG to tighten contracts and conditions has increased. |
| Greenland | Concession | Greenland’s fiscal regime is a concessionary system involving corporate income tax (on income (30%) and dividends (up to 37% WHT)) and royalties (not currently levied). |
| India | Production Sharing Contract | India’s fiscal system is a hybrid one of Production Sharing Contracts with the government and aspects of royalty payments, cost recovery and CIT. A new Direct Tax Law is to come into operation April 1, 2012. |
| Indonesia | Hybrid | Indonesia mainly uses production sharing contracts for its fiscal regime. This involves a first tranche payment of petroleum (FTP), bonuses, cost recovery, profit sharing, income taxes and domestic market obligations (DMO). |
| Iran | Service Contract | Iran’s fiscal regime is based on service contracts involving cost recovery and a remuneration fee. |
| Iraq | Hybrid | The Iraqi fiscal regime involves technical service contracts. These involve signature bonuses, cost recovery, supplementary cost, remunerations fee and corporate income tax. The Regional Government of Kurdistan has issued PSCs and discussion whether these must be converted to service agreements is currently ongoing. |
| Ivory Coast | Hybrid | The fiscal system is a not standard mix CIT (25%), royalties, bonuses, surface rents and additional petroleum taxes contained in the PSC or Service Contract. The Ivorian tax law and petroleum code apply. Different fiscal regimes apply to Exploration and Production (E&P) companies versus Petroleum Service Contractors. |
| Kazakhstan | Concession | A new regime was introduced from January 1, 2010. Prior PSCs and contracts specifically approved by the President may have different rules. The current regime is a blend of corporate income tax (20% reducing to 15% in 2014), rent tax on exports (around 17%), bonuses and royalty-type taxation (a MET of 5 to 18%) plus a $20 per tonne export duty and an excess profits tax. Higher oil and mining taxes will compensate for the lower CIT planned. |
| Kenya | Production Sharing Contract | The fiscal regime in Kenya is production sharing system. The main elements are income tax, profit sharing and cost recovery. No oil has yet been discovered in Kenya. |
| Libya | Production Sharing Contract | The Libyan fiscal regime is based on PSCs involving CIT and a surtax designed to tax profits at the 65% rate. Taxes are paid through the national oil company. The Libyan Dinar is not a convertible currency. |
| Madagascar | Production Sharing Contract | The fiscal regime in Madagascar is mainly based on PSCs (joint ventures are permitted) and includes royalty, cost recovery, profit sharing and income tax. |
| Malaysia | Production Sharing Contract | The fiscal regime is a blend of a petroleum income tax (38%) and royalties (10%). Income from upstream petroleum operations falls under the Petroleum (Income Tax) Act PITA. |
| Mozambique | Production Sharing Contract | The fiscal regime comprises royalties (2% to 10%), fees (at least $50,000 per contract) and corporate income tax (32% on worldwide income). Oil operations are based on Production Sharing Contracts. There are strict foreign exchange control regulations in force. |
| Namibia | Concession | Namibia’s fiscal regime is a mixture of a Petroleum Income Tax (35%) under the Petroleum (Taxation) Act 3 of 1991 (the PTA), administrative provisions of the Income Tax Act 24 of 1981,(e.g. an additional profits tax of at least 15%), royalties (5%) levied on sales under the Petroleum (Exploration and Production) Act 2 of 1991 and registration fees (US$ 9 per sq. km. licence block for the first 4 years, increasing thereafter). |
| Netherlands | Concession | The fiscal regime comprises corporate income tax (25.5% over €200,000 ($US 267,000)), a surface rental tax ($930 per sq. km. for production areas), a 50% state profit share (SPS) and royalty (0% to 7%) based taxation. |
| New Zealand | Concession | A combination of Corporate Income Tax (30%) and royalty based taxation (usually 5% of value or 20% of profits) is used in the fiscal regime. |
| Nigeria | Hybrid | In Q1 2011 the government is still struggling to introduce a new Petroleum Industry Bill into law. Consequently details provided here are subject to change. At present both concessionary and petroleum sharing agreements are used. Companies carrying on petroleum operations are deemed to be in the upstream regime (and exclude refining) and taxed under the Petroleum Profits Tax Act (PPTA) 2004 as amended. Nigeria operates both a licensing regime (joint ventures with the Federal Government or sole risk operator) and contractual regimes (risk service contracts or production sharing contracts). PSCs have been used most frequently in Nigeria. Risk Service Operators are treated as not carrying out petroleum operations but rather on performance contracts and paid as service providers (taxable at the lower rates of the Companies Income Tax Act rather than the PPTA. Under all arrangements the Federal Government operates through the Nigerian National Petroleum Company (NNPC). |
| Norway | Upstream operations attract both a CIT of 28% plus a special tax of 50% along with surface fees (starting at US$5,146 per sq. km.). | |
| Oman | Production Sharing Contract | The main part of the fiscal regime is corporate income tax (55%), and are combined with surface fees and bonuses described in the Production Sharing Contract. |
| Pakistan | Hybrid | Onshore operations have petroleum concession arrangements while PSCs are used for offshore. There is a blend of Corporate Income tax (40%), a windfall levy (roughly $20 per bbl at an oil price of $80), royalty payments (12.5%), surface rents and bonuses in the fiscal regime. |
| Papua New Guinea | Hybrid | PNG’s fiscal regime is a mix of income tax, royalties and development levies, additional profits tax and infrastructure tax credits. A tax clearance certificate is required to remit more than PGK 200,000 (about US$78,000) during a year. |
| Peru | Concession | The fiscal regime in Peru for oil and gas exploration and production is set under licences or service contracts with the Government. The Government guarantees that the tax law will not change over the life of the contract. |
| Poland | Concession | The basis of Poland’s fiscal regime is a concessionary system involving surface rental and concession fees, royalty and corporate income tax payments. |
| Republic of Congo | Production Sharing Contract | The fiscal system in the Republic of the Congo (Congo Brazzaville) is one of PSCs, comprising cost recovery and profit sharing. |
| Russia | Hybrid | The fiscal regime is a blend of corporate profits tax (20%), mineral extraction tax (roughly 22% of the value of production in excess $15 per bbl.) and export duty (35 to 65%, with Urals at $88, the duty is $45 per bbl.). |
| Senegal | Hybrid | A mixture of Corporate Tax (35%), Annual Surface Rent, Royalty (2-10%) and Additional Petroleum Tax comprise Senegal’s fiscal regime. Both concessions and PSCs are used. |
| South Africa | Concession | South Africa’s fiscal regime comprises a combination of corporate income tax and royalties. The regime is in transition. |
| Sudan | Production Sharing Contract | Sudan’s fiscal regime is based on PSCs, including royalty, cost recovery and profit sharing |
| Tanzania | Production Sharing Contract | Tanzania’s fiscal regime includes CIT (30%), royalties (12.5% Onshore, 5% Offshore) and, potentially, additional petroleum tax (25% or 35% not yet introduced). |
| Thailand | Hybrid | There are 3 different fiscal regimes. The regimes are designated Thailand I (mainly projects prior to 1982), Thailand II (projects awarded 1982 to August 13, 1986), and Thailand III (projects awarded after August 14, 1986). Each regime has different benefit sharing structures. The regimes incorporate petroleum income tax, PSC and royalties along with an annual bonus (under Thailand II) and special remuneration benefits (under Thailand III). |
| Trinidad and Tobago | Hybrid | Either PSCs or Exploration and Production Licences are used. There is a separate fiscal regime for upstream oil companies governed by the Petroleum Taxes Act. This sets out a profits tax, a supplemental petroleum tax, a petroleum production levy, a petroleum impost, royalties, unemployment levy and green fund levy. |
| Tunisia | Hybrid | Tunisia’s fiscal regime is based on both PSCs (cost recovery and profit sharing) and Concessions (royalties and income taxation). Companies work in partnership with ETAP. |
| Uganda | Production Sharing Contract | As a new producer (oil expected in 2011) Uganda’s fiscal arrangements are in transition and a new Petroleum Bill is before parliament. The fiscal regime is a blend of income tax (30%), production sharing agreements with the government, bonuses, surface fees and royalty (5% to 12.5%) based taxation. |
| United Kingdom | Concession | The UK fiscal regime is a concessionary one involving corporate income taxes (28%) and supplementary charges (20%). A petroleum revenue tax of 50% applies to pre March 16,1963 concessions, but not subsequent ones. |
| United States | Concession | The U.S. fiscal regime is a combination of corporate income tax (35%), severance tax (to the States various rates) and royalty payments (12.5% to 30% Onshore, 18.75% Offshore). Onshore mineral rights may be held by the Federal government (managed through the Department of the Interior’s Bureau of Land Management or Department of Agriculture’s Forest Service), States, Indian reservations, individuals, corporations, trusts etc. Offshore mineral interests are originally owned by the Federal government (managed by the Department of the Interior’s Mineral Management Service (MMS). There is a foreign investment review board. |
| Venezuela | Joint Venture | The fiscal regime is based on a mixture of corporate income tax, royalty payments, indirect taxes and special contributions. According to law, upstream activities are reserved for the Venezuelan State operating directly or via state owned enterprises (e.g. Petróleos de Venezuela, S.A. (PDVSA)). Joint venture corporations (empresas mixtas) in which the State owns at least 50% are used and are subject to approval of the National Assembly which also sets the conditions of operation. |
| Vietnam | Production Sharing Contract | The Petroleum Law and other tax regulations provide the outline of the fiscal regime. The main features are a CIT of 50% (32% for encouraged projects), a royalty between 6 and 40% and an export tax between 5% and 50%. PSCs (in accordance with the model contract) between foreign oil companies and Vietnam Oil and Gas Group (Petrovietnam) are the means of operation. |
| Yemen | Production Sharing Contract | Yemen’s fiscal regime is based on PSCs with royalty payments, cost recovery and profit sharing being the main components. |