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KPMG: A Guide to Romanian Oil and Gas Taxation
Taxation has become a more and more demanding issue for companies in the oil and gas industry, especially after the introduction of additional taxes starting from 1 February 2013. 2014 will also represent a milestone because the basis of a new tax system for this sector will be discussed and implemented. The new system should be applicable from 1 January 2015.
“Moreover, the new tax changes applicable starting 1 January 2014 requiring the payment of 1.5% on the value of constructions owned by the taxpayer will most likely have a significant impact on this industry as well. Although this tax does not apply for constructions for which building tax is payable, or constructions owned by the state or which are due to be transferred to the state, it will, however, be payable for gas and petroleum wells, grids and pipe ducts. These assets have been exempt up to now. Consequently, it is important for each company in this sector to review the taxable base for the purposes of calculating this tax , for example, by identifying those elements which could be deducted from the value of the constructions, both from an accounting and a fiscal point of view”, said Ramona Jurubita, Tax Partner KPMG, Deputy Head of Taxation.
Nevertheless, in spite of the sometimes challenging fiscal environment in Romania, there are numerous opportunities for the sector which continue to make it very attractive for investors, for example the recent discoveries in the Black Sea, as well as the possibility of exploiting shale gas.
To help investors get the benefit of these opportunities, while at the same time understanding their fiscal obligations, KPMG in Romania has launched the first edition of A Guide to Romanian Oil and Gas Taxation. This guide was created to offer a complete picture of taxation in Romania, as well as of general and specific taxes applicable in the oil and gas industry.
The Guide is divided into 4 sections, as follows:
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Section 1 presents a complete image of the oil and gas reserves currently existing in Romania, as well as of Romanian oil and gas consumption.
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Section 2 contains information about the main taxes applicable to companies in this field. For example, it contains details of the calculation method of taxable profits, as well as an explanation of relevant VAT legislation. It explains withholding tax, excises, customs duties and local taxes.
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Section 3 outlines specific taxes applicable in the oil and gas industry, i.e. royalties that should be paid by the companies which exploit or transport these resources or the additional taxation applied as a result of the decentralization of the natural gas market.
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The last section presents a few general issues that a company has to face when performing exploration and exploitation activities, such as the foreign exchange regime applicable to transactions carried out and the implications of the agreements specific to this industry.
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 156 countries and have 152,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
KPMG in Romania and Moldova operates from six offices located in Bucharest, Cluj-Napoca, Constanta, Iasi, Timisoara and Chi?in?u. We currently employ 700 partners and staff; Romanians and Moldovans as well as expatriates.