Coherent Identifier About this item: 20.500.12592/vthxw8

A Fiscal Framework for Offshore Oil and Gas Activities in Romania /

2016

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Summary

The base for a resource rent tax is the difference between the present value of the revenue stream from a project and the present value of its operating and capital expenditures or, in other words, the present value of the economic rent generated by the project. [...] THE ROMANIAN OIL AND GAS INDUSTRY Romania is the seventh largest of the 28 EU countries by population, the ninth largest by area and the 13th largest by Gross Domestic Product.2 It is also one of the largest oil 1 Access from the Black Sea to the world ocean follows the Bosphorus Strait, the Sea of Marmara, the Dardanelles Strait, the Aegean Sea and the Sea of Crete to reach the Mediterranean Sea, [...] The advantage that resource rent taxes have over gross royalties is that they apply to a project’s economic rent — the difference between the market value of the revenues produced by the resource and the opportunity costs of all of the inputs, including the opportunity cost of capital invested in the project. [...] However, since a RRT essentially implies that the government is already sharing the costs and the benefits of the project with the firm, thus the risk, the uplift interest rate should be a risk free interest rate,25 assuming that the firm will be able to fully utilize the loss carryover in the future. [...] The two approaches are equivalent since the base of a RRT is essentially the difference between the present value of the revenue stream from a project and the present value of the operating and capital expenditures, or in other words, the present value of the economic rent generated by the project.

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european union government politics economy taxation natural gas depreciation government policy labour prices rent tax cost of capital government budget taxes corporate income tax corporate tax rents rate of return business finance energy and resource present value alberta energy auction barrel (unit) economic rent bosphorus

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