Montenegro: Taxes on oil exploration 59 percent20. February 2014. / SEE Energy News
Government approved the Proposal Law on Tax on Hydrocarbons, which stipulates that the tax rate on income from operations up stream is 59 percent. Taxpayer of hydrocarbons is a company or a foreign company that carries upstream operations under the concession contract for the production of hydrocarbons
The government submitted proposed legislation to the Assembly with a view to its adoption by summary procedure.
A spokesman for the Ministry of Finance, Maria Radenovic, said that the draft law introduces a new tax levy and creates a tax policy of profit from carrying operations related to the upstream industries, and that includes the extraction of hydrocarbons from reservoirs, the construction and use of plant and ancillary equipment for the production, supplies of hydrocarbons, oil and gas, and more.
“Bearing in mind that this is the exploitation of natural resources which are non-renewable resource, and starting from the practice of the countries having this policy, it is proposed that the tax rate on income from upstream operations is 59 percent,” said Radenovic after the Cabinet meeting.
Proposal for a Law, she added, is based on the model of the extra tax revenue generated by upstream activities, while profit from carrying out other activities that are not related to upstream operations would be taxed according to the provisions of the Income Tax Law.
“The law defines the taxpayer and the tax base. Taxpayer of hydrocarbons is a company or a foreign company that carries upstream operations under the concession contract for the production of hydrocarbons,” explained Radenovic.
According to her, the tax base is the difference between the income earned from the provision of upstream operations and the expense that is recognized and recognizes this law, which will be elaborated in detail bylaws.
“Law is the manner of calculation and payment of tax liability and corresponding penal policy,” added Radenovic.
It is defined that revenues generated from taxes on hydrocarbons are allocated in proportion 20 to 80 percent.
“This means that 20 percent of revenues belong to the budget of Montenegro, and the remaining 80 percent to the fund for the hydrocarbons which will be formed in the future”, said Radenovic.
Source; Serbia Energy See Desk
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