Government issues regulation on taxing oil production operations

13 Jun 2018  185 | Cambodia Travel News

Kelvin Tang, president of KrisEnergy. KT/Chor Sokunthea

The Ministry of Economy and Finance issued a sub-decree this week detailing taxation requirements for oil production operations in the Kingdom.

Sub-decree number 52, signed by Prime Minister Hun Sen in April and published in the Royal Gazette for the second quarter of the year, aims to boost the development of the local extractive industries by setting strong tax incentives for companies in the sector.

In particular, the regulation focuses on drilling activity in the Apsara oilfield, also known as Block A, an area in the Gulf of Thailand located approximately 150 kilometres from land, where water depths range between 50 and 80 metres.

Last year, Singaporean company KrisEnergy gained the right to develop the Apsara oilfield. The company holds a 95 percent working interest in the oilfield, with the remaining five percent held by the Cambodian government.

The sub-decree grants a raft of tax exemptions and incentives to companies operating in Block A. Taxes related to asset transfers, production costs, facilities and equipment, for example, will not be levied.

Likewise, companies will have to pay just 25 percent income tax during the first five years, and 30 percent in the following years.

Companies will also be exempted from paying the minimum tax as well as customs duties and VAT on imported goods, but they will be levied a tax of two percent on oil exports.

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