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Deloitte study : Effective taxation of the Upstream sector in Romania remains double that the average in the European countries
The Romanian Petroleum Exploration and Production Companies Association (ROPEPCA) presented in a press conference the results of the annual study where experts from Deloitte Romania analyze the development of effective taxation applied to oil and gas industry in Romania, compared to the situation in the European states, energynomics.ro informs.
The study reveals that the average taxation of the industry- royalties level and other taxes (e.g. supplementary tax on income as a result of liberalization of the natural gas prices, special construction tax, tax on crude) has increased in the period 2014-2016 from 15% to 17.5%. Starting with 2017, due to the elimination of the special construction tax, the average effective taxation decreased to 13.9% in Romania. The trend is contradictory to that of many European states where the effective average rate decreased as a response to the decrease of the oil and natural gas prices that affects the industry in the past years.
“This study contributes to correct information and clarification on the royalty’s regime at a European level in a time when false, incorrect information is circulated in the public space, contravening with regards to the development of major investment projects in the oil and gas industry that benefit the Romanian economy”, stated Harald Kraft, ROPEPCA President.
Deloitte analysis was performed on data from public sources and shows that the average effective rate of royalties and similar taxes decreased in 2016 compared with 2015 in 9 European countries: UK, Norway, Denmark, Hungary, Ireland, German, Spain, Italy and Albania.
Another conclusion of this study is that the effective tax rate determined gas upstream activity in Romania has a much higher value than that of that of oil production, the difference mainly resulting from the supplementary tax applicable to natural gas.
Currently, in Romania there are over 400 oil fields and more than 13,000 active wells. To maintain a constant level of oil and gas production it requires significant investment and a stable fiscal framework, predictable and friendly.