Parliament approves increased tax on oil companies’ revenues, for prices higher than RON 85/MWh of gas. ROPEPCA, dissatisfied

The Chamber of Deputies, as decisional body, has adopted on Tuesday, by a majority vote, the Law for the approval of government ordinance 7/2013 on the introduction of the tax on the extra revenues obtained as a result of the deregulation of natural gas prices. A voted amendment provides higher tax for prices above RON 85/MWh.

Thus, for prices below RON 85/MWh, the tax remains 60%, as stipulated by GO 7/2013, and for prices higher than RON 85/MWh, the tax will be 80% of the additional revenues.

Oil companies are unhappy with the form in which this law was adopted, hotnews.ro reports.

The tax due on additional income is 60% of the extra income, of which the royalties related to this income are deducted, as well as the investments for the development and expansion of the existing deposits, for the exploration and the development of new production areas, the joint report of the budget committee and industry committee reads.

Following the adoption of this law, the Romanian Petroleum Exploration and Production Companies Association (ROPEPCA) has stated in a press release that it notices “with great concern the recent amendments in Parliament with the purpose of changing the framework in which the petroleum industry operates, aiming to increase the taxation level from 60% to 80% for prices above RON 85/MWh and to make permanent the temporary tax provided by GEO 99/2016 and which were approved and voted by the Chamber of Deputies on 13.06.2017.”

ROPEPCA argues that by applying the additional tax exclusively to domestic production, this will be disadvantaged in relation to imported sources. “The liberalization of natural gas prices is not a phenomenon that justifies an additional tax, but represents the implementation of an objective assumed by Romania at European level to move to normality of a free market and in a unique European market context. Moreover, the increase of the quota is not justified by the current level of taxation of the Romanian industry. According to a recent Deloitte survey, while the effective average rate of royalties and other similar taxes on revenues have increased in Romania from 15% in 2014 to 17.5% in 2016, the average tax rate in Europe (excluding the Groeningen deposit in the Netherlands with a special tax regime) has fallen from 9.3% in 2014 to 7.9% in 2015,” reads the ROPEPCA press release.