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Upstream sector in Romania

Government wants to introduce an additional tax for oil companies

The Ministry of Finance is working at the new royalty system which will come into force on January 1st 2016 and wants to introduce an additional tax for part of the oil companies, but also tax reductions in certain conditions.

The new modality of hydrocarbon taxation, for which the National Agency for Mineral Resources (NAMR) works together with the Ministry of Public Finance, will be completed in August and will be debated in the Parliament in the autumn session.

"The Ministry of Public Finance manages this activity. There have been several rounds of discussions with the International Monetary Fund (IMF). Some evaluations and simulations have been made, three scenarios are considered. In the immediate period we will complete these scenarios", NAMR President Gheorghe Dutu stated for Mediafax.

The total value of oil and mining royalties collected by the state last year stood at RON 1.64bn (almost EUR 370mln), of which those for hydrocarbons amounted to RON 1.36bn. Most of the royalties are paid by Romgaz and OMV Petrom.

The new system will include royalties, but also an additional tax on profit made by companies from the upstream activity (oil and gas production), as well as a number of deductions for investments made in this segment.

"Operators want lower taxes, state officials want higher taxes, we need to find balance", NAMR head said. He mentioned that companies that would conduct deep offshore exploration and exploitation, as well as companies to which depleted fields will be leased will benefit from tax reductions.

Source: Realitatea, July 15th

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