TaxCorporate TaxKazakhstan to introduce oil production tax

Kazakhstan to introduce oil production tax

To boost its budget revenues, oil rich Kazakhstan plans to introduce oil production tax which is certain to alarm investors

Kazakhstan deputy finance minister Daulet Yergozhin has revealed his
government plans to introduce a production tax next year, which will be based on
output and world oil prices rather than export volumes.

He said the tax, which is likely to come into force in 2009, would also apply
to companies working in production sharing agreements (PSAs), which so far have
been exempt from the rent tax, introduced in 2004, according to
Reuters.
‘Everyone’s reaction will be predictably negative,’ Yergozhin told reporters in
the capital Astana.

Foreign investors have expressed their concern about the business climate in
Kazakhstan this year as a result of the country’s row with the Eni-led group
developing Kashagan; and the separate subsoil law amendments which permit the
government to unilaterally break contracts with oil companies.

Most key oil projects in Kazakhstan are PSAs such as Kashagan and the
Karachaganak deposit operated jointly by
BG and Eni.

Further reading:

PwC to probe Max Petroleum share option scandal

BG Group rocked by £104m write-down

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