Fiscal Systems for Hydrocarbons : Design Issues

Although host governments and the investors may share one common objective-the desire for the project to generate high levels of revenue-their other goals are not entirely aligned. Host governments aim to maximize the rent for their country over time, while achieving other development and socioeconomic objectives. Investors' aim is to ensure that the return on investment is consistent with the risk associated with the project, and with their corporations' strategic objectives. To reconcile these often conflicting objectives, more and more countries rely on transparent institutional arrangements and flexible, neutral fiscal regimes. This paper examines the key elements of the legal and fiscal frameworks utilized in the petroleum sector and aims to outline desirable features that should be considered in the design of fiscal policy with the objective of optimizing the host government's benefits, taking into account the effect that this would have on the private sector's investment. Chapters 2 and 3 provide background material on, respectively, the stages of an oil and gas project and the type of legal arrangements normally used in the petroleum sector. The relative advantages and disadvantages of the tax and non-tax instruments used in petroleum fiscal regimes are discussed in Chapter 4. Chapter 5 outlines the features of successful fiscal regimes, while system measures and economic indicators are described in Chapter 6. Finally, in Chapter 7, a sensitivity analysis is used to illustrate some typical fiscal systems' design issues.

Bibliographic Details

Main Author:	Tordo, Silvana
Language:	English en_US
Published:	Washington, DC: World Bank 2007
Subjects:	ACCOUNTING, ADMINISTRATIVE BURDEN, ADMINISTRATIVE FEES, ADMINISTRATIVE PROCEDURES, AMORTIZATION, ARBITRATION, BALANCE OF PAYMENTS, BENCHMARK, BID, BONDS, BORROWING, BUDGETING, CALCULATION, CALCULATIONS, CAPACITY CONSTRAINTS, CAPITAL EXPENDITURE, CAPITAL INVESTMENT, CASH FLOW, CASH FLOWS, CHAMBER OF COMMERCE, COMMODITIES, COMMODITY, COMPETITIVE MARKET, COMPETITIVENESS, COPYRIGHT CLEARANCE, COPYRIGHT CLEARANCE CENTER, CORPORATE INCOME TAXES, CORPORATE TAX, CORPORATE TAX RATE, CORPORATE TAXES, COST ASSUMPTIONS, COST OF CAPITAL, COST RECOVERY, COST SAVINGS, COST STRUCTURE, COUNTRY RISK, COUNTRY RISKS, CREDITS, CURRENCY, DECISION MAKING, DEPOSITS, DEPRECIATION, DEVELOPING COUNTRIES, DISCLOSURE OF INFORMATION, DISCOUNT RATE, DISCOUNT RATES, DISCOUNTED VALUE, DISTORTIONARY EFFECTS, DOMESTIC MARKET, EARNINGS, ECONOMIC CONDITIONS, ECONOMIC EFFICIENCY, ECONOMIC IMPACT, ECONOMIC LIFE, ECONOMIC OBJECTIVES, ECONOMIC PERFORMANCE, ECONOMIC RENT, ECONOMIC STRENGTH, ECONOMICS, EFFECTIVE USE, ENTITLEMENTS, ENVIRONMENTAL, ENVIRONMENTAL IMPACT, ENVIRONMENTAL PRACTICES, ENVIRONMENTAL TAXES, EQUILIBRIUM, EQUIPMENT, EXCESS PROFITS, EXCHANGE CONTROLS, EXCHANGE RATES, EXPENDITURE, EXPENDITURES, EXPLOITATION, FAIR VALUE, FEASIBILITY STUDIES, FINANCIAL HEALTH, FINANCIAL INCENTIVE, FINANCIAL RISKS, FISCAL POLICIES, FISCAL POLICY, FLOW OF INVESTMENT, FOREIGN EXCHANGE, FOREIGN INVESTMENT, FUTURE CASH FLOW, FUTURE PRICES, FUTURE PROSPECTS, GDP, GLOBAL MARKET, GOVERNMENT GRANTS, GOVERNMENT POLICY, GOVERNMENT REVENUE, GROSS INCOME, GROSS REVENUE, HOME COUNTRIES, HOME COUNTRY, HOST GOVERNMENT, HOST GOVERNMENTS, INCENTIVE PROGRAMS, INCOME, INCOME TAX, INCOME TAXES, INEFFICIENCY, INFLATION, INSURANCE, INTANGIBLE, INTEREST RATE, INTERNAL RATE OF RETURN, INTERNATIONAL BANK, INTERNATIONAL INVESTMENT, INTERNATIONAL MARKET, INVESTING, INVESTMENT ACTIVITIES, INVESTMENT ACTIVITY, INVESTMENT DECISIONS, INVESTMENT OPPORTUNITIES, INVESTMENT PROJECTS, INVESTMENT RISK, INVESTMENT RISKS, JOB CREATION, JURISDICTIONS, LEGAL FRAMEWORK, LEGAL FRAMEWORKS, LEGAL SYSTEMS, LEGISLATION, LEVIES, LIABILITY, LOCAL INFRASTRUCTURE, MACROECONOMIC STABILITY, MARKET CONDITIONS, MARKET DEMANDS, MARKET PRICE, MARKET PRICES, MARKETING, MODEL CONTRACTS, NATURAL RESOURCES, NET WORTH, NORMAL PROFITS, OIL, OIL PRICE, OIL PRICES, OIL SECTOR, OPEC, OPTIMIZATION, OUTPUT, PARTICULAR COUNTRY, POLICY ENVIRONMENT, POLICY MAKERS, POLITICAL RISK, POLITICAL RISKS, POLITICAL STABILITY, PORTFOLIO, POTENTIAL INVESTORS, PRESENT VALUE, PRICE INDICES, PRICE LEVELS, PRICE VARIATIONS, PRICE VOLATILITY, PRIVATE INVESTORS, PRIVATE PARTIES, PRIVATE PROPERTY, PROBABILITY, PRODUCERS, PRODUCTION RATES, PRODUCTIVITY, PROFIT SHARING, PROFITABILITY, PROFITABILITY RATIO, PROPERTY RIGHTS, PUBLIC POLICY, RATE OF RETURN, RECLAMATION, REGULATORY FRAMEWORK, REMOTE AREAS, RENEGOTIATION, RENEGOTIATIONS, RESERVE, RESERVE FUNDS, RESERVES, RESOURCE ALLOCATION, RETURN, RISK MANAGEMENT, RISK MANAGEMENT STRATEGIES, RISK PROFILE, RULE OF LAW, SALE, SALES, SAVINGS, SENIOR, SETTLEMENT, SHARE OF PROFIT, SHARE OF PROFITS, SHAREHOLDERS, STATISTICAL DATA, STREAMS, SURETIES, TAX, TAX CODE, TAX CREDIT, TAX DEDUCTIBLE, TAX LAWS, TAX LIABILITY, TAX RATES, TAX REGIME, TAX REVENUE, TAX REVENUES, TAX SYSTEM, TAX SYSTEMS, TAX YEAR, TAXABLE INCOME, TAXATION, TERMINATION, TOTAL COST, TRANSPARENCY, TREASURY, TYPE OF INVESTMENT, VALUABLE, VALUATION, VALUE ADDED, WEALTH,
Online Access:	http://documents.worldbank.org/curated/en/2007/01/8333578/fiscal-systems-hydrocarbons-design-issues https://hdl.handle.net/10986/6746
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