Kazakhstan to impose oil extraction tax at 7% to 20% from 2009

 

A new Tax Code is expected to impose tax on oil extraction from 2009. The rate of the tax will range between 7% and 20% depending on a company’s output.

 

According to the draft Tax Code, the tax will be imposed in keeping with the following pattern:

 

7% – oil output under 250,000 tonnes;

 

9% – output under 500,000 tonnes;

 

10% – up to 1m tonnes;

 

11% – up to 2m tonnes;

 

12% – up to 3m tonnes;

 

13% – up to 4m tonnes;

 

14% – up to 5m tonnes;

 

15% – up to 7m tonnes;

 

17% – up to 10m tonnes;

 

20% – up to 20m tonnes;

 

If crude oil or gas condensate is sold on the domestic market, a reduction coefficient of 0.5 will be applied to the tax rate.

 

Tax for gas extraction is set at 10%.

 

If gas produced is supplied to the domestic market, the rate of the tax is set in keeping with the following pattern:

 

0.5% – gas output under 1bn cu. m.

 

1% – under 2bn cu. m.;

 

1.5% – over 2bn cu. m.

 

Extracted gas which is re-injected into the well is not subject to this tax.

 

The new provision demands oil and gas companies notify relevant government bodies on their production targets until 20 January.