1. There has been an increase in oil and gas asset divestments and acquisitions in Nigeria, with traditional multinational companies selling assets to new entrants like local and smaller companies. This creates opportunities but also warrants examining the fiscal and regulatory treatment of such transactions.
2. Asset purchases can take several forms with different types of consideration: monetary payments, farm-ins requiring field work by the buyer, earn-ins for work obligations, asset swaps, and farm-outs allowing third parties to explore and produce petroleum.
3. The fiscal implications depend on whether a transaction is considered an asset alienation or license assignment. Capital gains tax and stamp duties typically apply, but share sales do not
Fast track merger and cross border merger under companies act, 2013DVSResearchFoundatio
OBJECTIVE
In order to streamline the process of merger or amalgamation, Companies Act, 2013 (the Act) has brought in simplified procedures to enable the same. Apart from the regular provisions stipulated for merger or amalgamation of Companies under Section 232 of the Act, for certain companies the process has been even more relaxed. This process is popularly termed as Fast Track Merger and is covered under Section 233 of the Act read with Rules made there under. Also, provisions are enshrined in the Act for merger or amalgamation of Company with Foreign Company which is otherwise called as Cross Border Merger.
In this webinar, we shall look upon the aspects of procedures involved in fast track merger and cross border merger, secretarial compliances and relevant statistics.
The Companies Act, 2013 introduce the novel concepts fast track merger for Small Companies and Holding and its wholly owned subsidiary Companies. This is the first significant change to merger and amalgamations regime in the last six decades, with the previous Companies Act having been in place since 1956.
Union Budget 2020:Clause by Clause Analysis of Direct Tax ProvisionsDVSResearchFoundatio
OBJECTIVE
Union Budget 2020 has come up with various amendments relating to direct tax as well as indirect tax provisions. The webinar shall focus on clause by clause analysis of amendments of the direct tax provisions, including the backdrop under which these amendments are proposed and the insights on the impact it will have on the masses as a whole.
This presentation is about Revenue Sharing Contract for Hydrocarbon Industry in India. This Revenue Sharing Regime is an evolution of Production Sharing Contracts. Indian Hydrocarbon contract policy is called NELP- New Exploration & Licencing Policy that was followed till 2016 but now new HELP- Hydrocarbon Exploration & Licencing policy is in place.
Fast track merger and cross border merger under companies act, 2013DVSResearchFoundatio
OBJECTIVE
In order to streamline the process of merger or amalgamation, Companies Act, 2013 (the Act) has brought in simplified procedures to enable the same. Apart from the regular provisions stipulated for merger or amalgamation of Companies under Section 232 of the Act, for certain companies the process has been even more relaxed. This process is popularly termed as Fast Track Merger and is covered under Section 233 of the Act read with Rules made there under. Also, provisions are enshrined in the Act for merger or amalgamation of Company with Foreign Company which is otherwise called as Cross Border Merger.
In this webinar, we shall look upon the aspects of procedures involved in fast track merger and cross border merger, secretarial compliances and relevant statistics.
The Companies Act, 2013 introduce the novel concepts fast track merger for Small Companies and Holding and its wholly owned subsidiary Companies. This is the first significant change to merger and amalgamations regime in the last six decades, with the previous Companies Act having been in place since 1956.
Union Budget 2020:Clause by Clause Analysis of Direct Tax ProvisionsDVSResearchFoundatio
OBJECTIVE
Union Budget 2020 has come up with various amendments relating to direct tax as well as indirect tax provisions. The webinar shall focus on clause by clause analysis of amendments of the direct tax provisions, including the backdrop under which these amendments are proposed and the insights on the impact it will have on the masses as a whole.
This presentation is about Revenue Sharing Contract for Hydrocarbon Industry in India. This Revenue Sharing Regime is an evolution of Production Sharing Contracts. Indian Hydrocarbon contract policy is called NELP- New Exploration & Licencing Policy that was followed till 2016 but now new HELP- Hydrocarbon Exploration & Licencing policy is in place.
Korean-Thai Chamber of Commerce Legal Seminar on Employment and Labour Protec...Vincent BIROT
On 29th June 2017 the KTCC organized a half-day seminar on legal issues focusing on employment and labour protection law, merger and acquisition and legal updates. Lawyers from LawPlus Ltd., led by Kowit Somwaiya, Managing Partner, spoke at the seminar on an exclusive basis. The presentation took 3 hours followed by a Q&A session for 1 hour. The seminar was held at Dusit Thani Pattaya Hotel and attended by 140 attendees.
The purpose of this update is to summarise developments that occurred during the third quarter of 2015, specifically in relation to Income Tax and VAT. Johan Kotze, who is a Tax Executive at Shepstone & Wylie Attorneys, has compiled this summary.
The aim of this summary is for clients, colleagues and friends alike to be exposed to the latest developments and to consider areas that may be applicable to their circumstances. The reader is invited to contact Johan Kotze to discuss their specific concerns and, for that matter, any other tax concerns.
Update on the Latest Laws and Regulations for M&A and JV Deals in ThailandLawPlus Ltd.
Amendments to the Civil and Commercial Code (“CCC”)
Business Collateral Act B.E. 2558 (2015) (“BCA”)
No change to the Securities Law and Regulations
No change to the Foreign Business Act B.E. 2542 (1999) (“FBA”)
Legislation Developments in Myanmar, Singapore, Vietnam
Potential Implications of Legislative Changes on M&A and JV Deals
Karnataka HC endorses tax avoidance technique to lessen minimum alternate tax...D Murali ☆
Karnataka HC endorses tax avoidance technique to lessen minimum alternate tax (MAT) - T. N. Pandey - Article published in Business Advisor, dated June 10, 2016 - http://www.magzter.com/IN/Shrinikethan/Business-Advisor/Business/
Tweeted on www.twitter.com/BusinessAdvDM #BusinessAdvisorArchives
Key Takeaways:
- Rationale for Introducing Penalty Provisions
- Consequences of Fake Invoicing under Income Tax Act and GST
- Legal Proceedings and Compounding of Offences
- Judicial Precedents
Material for PGPSE participants of AFTERSCHOOOL CENTRE FOR SOCIAL ENTREPRENEURSHIP. PGPSE is an entrepreneurship oriented programme, open for all, free for all.
Incorporation of Limited Liability Partnership (LLP) and conversion into CompanyDVSResearchFoundatio
Objectives & Agenda :
One of the convenient forms of running an organisation is the Limited Liability Partnership (LLP). It has similar features as that of a Company and has various advantages. With the advent of ease of doing business initiative, incorporation of LLP has become simple. The webinar covers the procedure for incorporation of an LLP under the LLP Act, 2008 read with LLP Rules, 2009 and its conversion into Company as per the provisions of the Companies Act, 2013.
Iskra will take part in Saudi Messe 2016 from 9 - 11 of May. We will share with you our best solutions and products for Energy and Telecommunication sectors. Looking forward to see you there!
Korean-Thai Chamber of Commerce Legal Seminar on Employment and Labour Protec...Vincent BIROT
On 29th June 2017 the KTCC organized a half-day seminar on legal issues focusing on employment and labour protection law, merger and acquisition and legal updates. Lawyers from LawPlus Ltd., led by Kowit Somwaiya, Managing Partner, spoke at the seminar on an exclusive basis. The presentation took 3 hours followed by a Q&A session for 1 hour. The seminar was held at Dusit Thani Pattaya Hotel and attended by 140 attendees.
The purpose of this update is to summarise developments that occurred during the third quarter of 2015, specifically in relation to Income Tax and VAT. Johan Kotze, who is a Tax Executive at Shepstone & Wylie Attorneys, has compiled this summary.
The aim of this summary is for clients, colleagues and friends alike to be exposed to the latest developments and to consider areas that may be applicable to their circumstances. The reader is invited to contact Johan Kotze to discuss their specific concerns and, for that matter, any other tax concerns.
Update on the Latest Laws and Regulations for M&A and JV Deals in ThailandLawPlus Ltd.
Amendments to the Civil and Commercial Code (“CCC”)
Business Collateral Act B.E. 2558 (2015) (“BCA”)
No change to the Securities Law and Regulations
No change to the Foreign Business Act B.E. 2542 (1999) (“FBA”)
Legislation Developments in Myanmar, Singapore, Vietnam
Potential Implications of Legislative Changes on M&A and JV Deals
Karnataka HC endorses tax avoidance technique to lessen minimum alternate tax...D Murali ☆
Karnataka HC endorses tax avoidance technique to lessen minimum alternate tax (MAT) - T. N. Pandey - Article published in Business Advisor, dated June 10, 2016 - http://www.magzter.com/IN/Shrinikethan/Business-Advisor/Business/
Tweeted on www.twitter.com/BusinessAdvDM #BusinessAdvisorArchives
Key Takeaways:
- Rationale for Introducing Penalty Provisions
- Consequences of Fake Invoicing under Income Tax Act and GST
- Legal Proceedings and Compounding of Offences
- Judicial Precedents
Material for PGPSE participants of AFTERSCHOOOL CENTRE FOR SOCIAL ENTREPRENEURSHIP. PGPSE is an entrepreneurship oriented programme, open for all, free for all.
Incorporation of Limited Liability Partnership (LLP) and conversion into CompanyDVSResearchFoundatio
Objectives & Agenda :
One of the convenient forms of running an organisation is the Limited Liability Partnership (LLP). It has similar features as that of a Company and has various advantages. With the advent of ease of doing business initiative, incorporation of LLP has become simple. The webinar covers the procedure for incorporation of an LLP under the LLP Act, 2008 read with LLP Rules, 2009 and its conversion into Company as per the provisions of the Companies Act, 2013.
Iskra will take part in Saudi Messe 2016 from 9 - 11 of May. We will share with you our best solutions and products for Energy and Telecommunication sectors. Looking forward to see you there!
Ministerial Consent is required for Valid Change of Corporate Control under N...Acas Media
The Department of Petroleum Resources (“DPR”) on August 11, 2014, issued the “Guidelines and Procedure for Obtaining Minister’s Consent to The Assignment of Interest in Oil and Gas Assets” (the “Guidelines”). The Guidelines outlines the procedure for obtaining the consent of the Minister of Petroleum Resources (“Minister”) to the assignment of oil and gas concessions or an interest therein (“Consent”). The Guidelines are stated to be made pursuant to the provisions of Paragraph 14-16 of the First Schedule to the Petroleum Act (“the Act ”) and Sections 17 (5) (d) of the Oil Pipelines Act (“the OPA ”).
Here we are with the Thirty fifth successive issue of our monthly ‘Missive’.
We trust you will enjoy reading this Missive, even while soaking in the contents. We would very much appreciate your feedback which consistently helps us in improving and upgrading the contents.
Thanks and regards,
Knowledge Management Team
GAZT VAT guide on Financial Services - EnglishFarhan Osman
This guideline is directed for businesses involved in the Financial Services sector, including commercial banks, insurers, asset financing companies; or any business that provides financial services as part of its overall activities.
Latest Updates on Thailand's Laws and Regulations on Business AcquisitionsLawPlus Ltd.
- Updates on laws and regulations related to business acquisitions
- Legal issues for acquisitions of shares by foreign investors
- Disclosure requirements and procedures for acquisition of shares in listed companies
- Regulatory authorities involved with business acquisitions
Treasury notice creates need for caution for companies contemplating inversionsGrant Thornton LLP
Treasury notice creates need for caution.
The Treasury Department’s recent rules try to make tax inversions less financially attractive, so companies need to analyze whether the deals are still worth pursuing. Read more about inversions: http://gt-us.co/1oH7qCg
Taxation of Damages- "Damages paid for Breach of Contract to attract GST"EquiCorp Associates
Authority for Advance Rulings (AAR) has ruled that payments in respect to non-performance of a contract would be liable for Goods & Service Tax (GST). This view is based on the provisions under the erstwhile Service Tax Law, “agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act” was a declared service under Section 66E(e) of Finance Act, 1994. Similar provision has been incorporated in Central Goods and Services Tax Act, 2017 (CGST Act) also under Schedule II. Under GST law, the taxable event is supply which has been defined widely and includes all forms of supply for a consideration which is made in course of or in furtherance of business. The act of tolerance or agreeing to refrain from an act is treated as supply of service under the CGST Act. As per these provisions there should be an agreement between the parties to either refrain from doing an act, or to tolerate an act/situation or to do an act.
Pennsylvania House Bill 1414, referred to the Environmental Resources and Energy House Committee on May 16, 2013, which would require PA oil & gas operators to share certain information about production, wells and royalties with landowners/lessors.
The Italian Revenue Agency’s guidelines for LBO/MLBO transactionsEugenio Romita
On 30 March 2016 the Italian Revenue Agency («IRA») issued a comprehensive circular letter («Circular») where by it officially states for the first time its position on merger leveraged buy-out transactions as well as on several aspects connected there to, agreeing on the positions of the industry on the main issues of the above transactions but deviating from the above positions on some issues of detail.
Dear Readers,
We are pleased to present ‘TransPrice Times’ for the first fortnight of June, 2015.
As a focus point, we provide an insight into recent clarifications made on Advance Pricing Agreements (APA) Rollback rules and its implications.
Further, we also aim to shed light on significant case laws pronounced to equip you with latest happenings in India.
We hope you find this newsletter useful.
Happy reading !!!
Objectives of study:1. Concept of carbon credit2. Transactional or Settlement methods of Carbon credit3. Role of India in Carbon credit4. Method of Carbon Credit Accounting 5. Issues in carbon credit accounting
Similar to An Appraisal of the Fiscal Implication of Oil & Gas Asset Disposal in Nigeria (20)
An Appraisal of the Fiscal Implication of Oil & Gas Asset Disposal in Nigeria
1. 1
AN APPRAISAL OF THE FISCAL IMPLICATION OF OIL & GAS ASSET DISPOSAL IN NIGERIA*
There has been a surge in oil and gas assets divestment and acquisition in Nigeria in recent times
by the traditional and mostly established and experienced multinational oil companies to new
entrants who are mainly foreign independents, local and smaller companies. This development
has some advantages which include creating opportunities for local players to emerge,
development of technical competence of local companies and their ability to compete in the
international arena. The banking, and legal services sectors are also being exposed to asset
finance and documentation issues. Revenue is also being generated to the government through
tax and consent fees. While the advantages derivable from this trend are commendable, it is
expedient to examine the fiscal and regulatory treatment of such transactions.
Asset purchase could take any of the following forms with the distinguishing factor being the type
of consideration payable for each of them. These are:
Monetary consideration where the buyer pays cash at completion;
Farm-in where the consideration payable by the buyer is the performance of an obligation
relating to the field. This could take the form of actually paying for the performance of the
obligation or re-imbursement of the seller’s costs of the operator performing the
obligation.
Earn-in this is another form of farm-in but refers specifically to a situation where the farm-
in relates to performance of a work obligation and where it is unlikely that consent to a
farm-out would be granted;
Asset swap/exchange – this involves a situation where some or all of the consideration to
be paid by the buyer is the transfer of some other oil and gas interest to the seller;
Farm-out is another form of asset divestment which according to Regulation 17 (4) of the
Oil Exploration, Oil Prospecting Licences and Oil Mining Leases Regulations made
pursuant to Section 2 (3) of the Petroleum Act is “an agreement between the holder of an
oil mining lease and a third party which permits the third party to explore, prospect, win,
work and carry away any petroleum encountered in a specified area during the validity of
2. 2
the lease.” Farm-out is therefore a recognised way to dispose oil and gas acreage under
our legal system.
The fiscal implication on any of the above depends on whether it is perceived as alienation or
assignment of an interest in a licence. The known tax payable upon a successful asset disposal
deal is capital gains tax accruing from the disposal under the Capital Gains Tax Act LFN, 2004 at
the rate of 10% - Section 2. The amount of capital gains is calculated after deducting expenses
associated with the disposal of the assets including deductions relating to any income, or profits
or gains or losses of the person making the disposal for the purposes of the Personal Income Tax
Act, the Companies Income Tax Act or the Petroleum Profits Tax Act. However, any money that
has been taken into account as balancing charge under the Personal Income Tax Act, the
Companies Income Tax Act or the Petroleum Profits Tax Act shall not be excluded as part of the
consideration for the disposal of the asset. A company may claim rollover relief and, therefore,
postpone the tax liability if the proceeds from the disposal are used to acquire an asset similar in
nature to the one disposed.
In addition to capital gains tax, asset disposal attracts stamp duty under the Stamp Duties Act
which requires instruments such as deeds of assignment, etc to be duty chargeable. An asset
purchase would allow the buyer to take the benefit of existing capital allowances under the
Petroleum Profit Tax Act Cap. P13 LFN, 2004 in respect of the assets depending on the contractual
and fiscal nature of the field acquired. On the other hand, sale of shares does not attract capital
gains tax pursuant to Section 30 of the Capital Gains Tax Act. A nominal stamp duty applies to the
share transfer documents. This constitutes an advantage to the seller but the buyer of the shares
would assume any Company Tax losses of the company being acquired and other historical
liabilities.
It is not clearly stated under the current Petroleum Act whether sale of controlling shares in a
company occasioning change in control of the company including its assets requires the consent
of the Petroleum Minister. Following the case of Moni PuloLimited V. BrassExploration Unlimited
& Ors (2012) 6 CLRN 153, the Department of Petroleum Resources (DPR) has now clarified the
legal and regulatory treatment of assignment of shares of an Oil and Gas Company and other
related transactions as regards oil and Gas assets through its Guidelines and Procedures for
Obtaining Minister’s Consent to the Assignment of Interest in Oil and Gas Assets issued on August
11, 2014 and made pursuant to Paragraphs 14-16 of the First Schedule to the Petroleum Act and
Section 17 (5)(d) of the Oil Pipelines Act (the Consent Guidelines). The Consent Guidelines states
what constitutes an Assignment in the following terms:
“Assignment as used herein involves the transfer of a licence, lease or marginal field or an interest,
power or right therein by any company with equity, participating, contractual or working interest in
the said OPL, OML or marginal field in Nigeria, through merger, acquisition, take-over, divestment
or any such transaction that may alter the ownership, equity , rights or interest of the assigning
company in question, not minding the nature of upstream arrangement that the assigning
company may be involved in, including but not limited to Joint Venture (JV), Production Sharing
Contract (PSC), Service Contract, Sole Risk (SR) or Marginal Fields operation”
3. 3
The Consent Guidelines further listed instances of assignment to include among others exchange
or transfer of Shares; private or public listing of a part or of the whole of the shares of a Company
which holds interest in an oil block in a Stock Exchange anywhere in the World. The Consent
Guidelines has not only ensured certainty as to the requirement of the Minister’s Consent to such
transaction but has gone ahead to clarify regulatory treatment of similar transactions including
private and public listing of Company’s shares anywhere in the World.
It should be noted that the Consent Guidelines do not clearly specify the fiscal treatment of such
acquisition of shares. Will the seller be subject to Capital Gains Tax or will the seller be merely
subject to payment of stamp duty on the share transfer document under the Stamp Duties Act? It
would appear that share disposal though regarded as an assignment will continue to attract
stamp duty as against capital gains tax. The Consent Guidelines are at best a subsidiary legislation
and cannot override the specific provisions of the Capital Gains Act excluding share and stock
transactions from the Act. The tax implication of the Consent Guidelines on acquisition of shares
therefore is that such a transaction will now be subject to payment of the prescribed fee and such
other fee or premium for the Petroleum Minister’s Consent pursuant to paragraphs 14 and 15 of
the First Schedule to the Petroleum Act.
There has been an issue as to whether or not oil and gas asset disposal is subject to Value Added
Tax Act. The Federal High Court in the case of CNOOC Exploration and Production Nigeria
Limited v. Attorney-General of the Federation, Federal Inland Revenue Service and South Atlantic
Petroleum Limited (FHC/ABJ/CS/605/07) appears to have resolved this issue when it held that
Value Added Tax (VAT) does not apply in cases of assignment of an oil and gas asset.
In conclusion, tghe clarification by the DPR regarding consent requirement for share transactions
is a step in the right direction as it has created certainty in the system. A new entrant who wants to
acquire assets through the shares acquisition process will now know in advance that the
Petroleum Minister’s consent would be needed. One of the major challenges for this additional
regulatory requirement for consent is the delay inherent in obtaining Petroleum Minister’s
Consent. It would be expedient for the Regulators to further provide by way of Guidelines,
timelines and steps which will guide the Petroleum Minister to expeditiously grant or decline
his/her consent. This will further engender transparency, confidence and certainty in the oil and
gas asset disposal process.
*Donald Ibebuike is a Partner in Foundation Chambers.