Convergence Programme 2016-2019: Oil industry – tax on extra profits from exploitation

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The government envisages for 2017 a new system of taxation in the oil sector, applicable to all holders of petroleum agreements by distinct taxation of onshore and offshore segments, for exploration and production, the National Convergence Programme 2016-2019 reads, according to hotnews.ro. Basically, the Government intends to review the taxation system of oil and gas production by introducing a tax on extra profit made by the upstream sector (exploration and production), but with additional application of a tax deduction on investments.

“The taxation system will ensure that the real taxation rate for the companies in the field will not exceed 60%, the level used at international level,” the document reads.

The Finance Ministry intended to elaborate by April 2016 to a draft law on the taxation of the oil sector. Finance Minister Anca Dragu announced in December that the draft will be released for public debate in the first quarter of next year, a draft law on royalties to come into force in 2017.

Currently, royalties are between 3.5% and 13.5% of production, depending on the type of the hydrocarbon deposits. The royalty regime should have been changed two years ago, but the government has postponed the development and implementation of a new legislative package.

 

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