Reg­u­la­tions on tax­ing oil pro­duc­tion oper­a­tions is­sued

The Myanmar Times - - International Business -

THE Min­istry of Econ­omy and Fi­nance is­sued a sub-de­cree this week de­tail­ing tax­a­tion re­quire­ments for oil pro­duc­tion oper­a­tions in the King­dom.

Sub-de­cree num­ber 52, signed by Prime Min­is­ter Hun Sen in April and pub­lished in the Royal Gazette for the sec­ond quar­ter of the year, aims to boost the development of the lo­cal ex­trac­tive in­dus­tries by set­ting strong tax in­cen­tives for com­pa­nies in the sec­tor.

In par­tic­u­lar, the reg­u­la­tion fo­cuses on drilling ac­tiv­ity in the Ap­sara oil­field, also known as Block A, an area in the Gulf of Thai­land located ap­prox­i­mately 150 kilo­me­tres from land, where wa­ter depths range be­tween 50 and 80 me­tres.

Last year, Sin­ga­porean com­pany KrisEn­ergy gained the right to de­velop the Ap­sara oil­field. The com­pany holds a 95 per­cent work­ing in­ter­est in the oil­field, with the re­main­ing five per­cent held by the Cam­bo­dian gov­ern­ment.

The sub-de­cree grants a raft of tax ex­emp­tions and in­cen­tives to com­pa­nies op­er­at­ing in Block A. Taxes re­lated to as­set trans­fers, pro­duc­tion costs, fa­cil­i­ties and equip­ment, for ex­am­ple, will not be levied.

Like­wise, com­pa­nies will have to pay just 25 per­cent in­come tax dur­ing the first five years, and 30 per­cent in the fol­low­ing years.

Com­pa­nies will also be ex­empted from pay­ing the min­i­mum tax as well as cus­toms du­ties and VAT on im­ported goods, but they will be levied a tax of two per­cent on oil ex­ports.

Cheap Sour, di­rec­tor of the Pe­tro­leum Depart­ment at the Min­istry of Mines and En­ergy, told Kh­mer Times that KrisEn­ergy is now pre­par­ing the ten­der process to se­lect the com­pany that will op­er­ate the plat­forms.

“Ev­ery­thing is go­ing as planned and we ex­pect to ex­tract the first drop of oil by end of 2019,” he said.

“The Pe­tro­leum Law has yet to be fin­ished, but we have signed a pe­tro­leum ex­trac­tion agree­ment with KrisEn­ergy so that they can be­gin work,” Mr Sour said, adding that he ex­pects the Pe­tro­leum Law to be ready by the end of the year.

KrisEn­ergy an­nounced in Oc­to­ber 2017 that it had reached a fi­nal in­vest­ment de­ci­sion to pro­ceed with the first phase of development in the Ap­sara oil­field, and ex­pects to be­gin oil pro­duc­tion by 2019. Around three mil­lion tonnes per year will be pro­duced ini­tially, even­tu­ally ex­pand­ing to eight mil­lion by 2023.

– Kh­mer Times

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