Tax system APPLICABLE TO PETROLEUM Operations

It is clear from the wording of this letter that this”fixed post-tax relief to the shareholders of ADM enue competitiveness of their oil operations in Abu Dhabi.

independent of the calculation of Abu Dhabi quite and should therefore,  affect the basis of taxation.  This special treatment w later extended to ADPC and the”fixed margin”  gradually in until it reached its present amount of s1.00 per barrel.

Fixing the Price of oil for Tax or Other Purposes The old-style concession agreements stipulated a payment of royalty charges on each ton of oil produced,  regardless of its sal price or the profit realized from it,  indicating that governments were not really interested in the price at which the oil was sold.

Then,  in 1950-1951,  certain oil producing countries in the Middle East(Saudi Arabia,  Iraq and Kuwait)  adopted the profit sharing principle(Abu Dhabi adopted the same principle in 1966)  According to this principle,  the host government’s share moved ed royalty per unit of production or export to 50 percent of the net company profit based on posted prices.  When the  financial arrangement was adopted,  the host countries became directly affected by the posted price(which was a tax reference used for the calculation of the companies’  profits and did n always reflect market realities).

In that period,  until the 1970s,  the posted prices of and companies crude oil were by the alone without any consultation with the host countries.  February 1959,  the oil companies decided,  without Middle he governments concerned,  to the price of Eastern oil by cut about 18 cents per barrel.  In f the spite o companies action they went on 960 by an average of about 9 recognized Continue reading