Timor-Leste Fiscal Framework



       Angelo de Almeida
          Revenue Commissioner
      Ministry of Planning and Fin...
Petroleum Taxation Act

• Introduction
• Framework
• Tax details
• Administration
Framework


• Overall administration framework
  provided by UNTAET 2000/18
• The Petroleum Taxation Act (PTA)
  supplemen...
Petroleum Tax Act Jurisdiction

              Timor Location Map
                     DILI




     KUPANG       Joint Pet...
Petroleum Taxation Act

• If Timor-Leste elects to take share of
  project, then the PTA states no
  capital gain, assessa...
Tax Ring Fencing

                        Timor-Leste
                          or JPDA

      Contract Area A            ...
Petroleum Taxation Act (cont)

• Rate is 30% of taxable income
  – No branch profits tax

• Petroleum valuation principles...
Petroleum Taxation Act (cont)

• Income – revenue from PSC
• Deductible Costs:
  – Exploration cost depreciation 5 year
  ...
Life of Project Fiscal Regime
                                                                      Once exploration
     ...
Petroleum Taxation Act (cont)

• Supplemental Petroleum Tax
  – Supplemental Petroleum Tax of 22.5%
    post realization o...
Petroleum Tax Administration

• Timor-Leste is fully committed to the
  principles of the Extractive Industries
  Transpar...
Petroleum Tax Administration (cont)

• International tax professionals will be
  retained to assist PTD
• PTD will continu...
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GEOLOGIA DO TIMOR 6

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GEOLOGIA DO TIMOR 6

  1. 1. Timor-Leste Fiscal Framework Angelo de Almeida Revenue Commissioner Ministry of Planning and Finance
  2. 2. Petroleum Taxation Act • Introduction • Framework • Tax details • Administration
  3. 3. Framework • Overall administration framework provided by UNTAET 2000/18 • The Petroleum Taxation Act (PTA) supplements UNTAET 2000/18 • Scope – applies to Timor-Leste and JPDA
  4. 4. Petroleum Tax Act Jurisdiction Timor Location Map DILI KUPANG Joint Petroleum Development Area DARWIN DARWIN 0 100 200 KM
  5. 5. Petroleum Taxation Act • If Timor-Leste elects to take share of project, then the PTA states no capital gain, assessable income or loss arises • Petroleum related expenditure is only deductible against petroleum related income • Taxable income and expenditure is ring fenced by contract area
  6. 6. Tax Ring Fencing Timor-Leste or JPDA Contract Area A Contract Area B Field A Field B Field C Field D PTA Treatment
  7. 7. Petroleum Taxation Act (cont) • Rate is 30% of taxable income – No branch profits tax • Petroleum valuation principles same as PSC • Final withholding tax of 6% applies to petroleum related services
  8. 8. Petroleum Taxation Act (cont) • Income – revenue from PSC • Deductible Costs: – Exploration cost depreciation 5 year straight-line – Development costs 10 year straight-line – Units of production depreciation for short- life fields where >80% reserves produced in first 5 years’ production – Annual contributions to the decommissioning cost reserve under PSC
  9. 9. Life of Project Fiscal Regime Once exploration While contractor is and development SPT paid only If recovering costs costs are contractor return and uplift recovered, profit exceeds 16.5% Timor-Leste Share % petroleum starts Supplemental Petroleum Tax (PTA) Uplift defers when 40% of revenue remaining profit oil starts after cost recovery (PSC) Income tax (PTA) Income tax (PTA) Note: Withholding tax not shown 5% Royalty (PSC) Time
  10. 10. Petroleum Taxation Act (cont) • Supplemental Petroleum Tax – Supplemental Petroleum Tax of 22.5% post realization of 16.5% IRR – Subsequent incremental investment may reduce the IRR below 16.5% in which case SPT is not paid again until the project achieves a 16.5% IRR
  11. 11. Petroleum Tax Administration • Timor-Leste is fully committed to the principles of the Extractive Industries Transparency Initiative (EITI) • Timor-Leste Petroleum Tax Division (PTD) has been providing professional services to the Petroleum Tax Payers since year 2000 • Self assessment system will continue with review and audit by PTD
  12. 12. Petroleum Tax Administration (cont) • International tax professionals will be retained to assist PTD • PTD will continue to develop computerized systems for tax administration and communication – Canadian SIGTAS (Standard Integrated Government Tax Administration System) - fully computerized tax administration software

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