Some tax and customs exemption can be granted by the government for specified economic sectors (e.g., oil and gas sector, public works sector ) and these exemptions shall be negotiated in the contract signed between the operator and the government (production sharing agreement, public works contract).
Incentives available to companies operating in the oil and gas sector include:
- Reduced withholding tax on payments made to contractors and sub-contractors at 6.25% (residents);
- Reduced withholding tax on mobilization, demobilization and transportation services at 5% (non-residents);
- A 13% surcharge in the form of an excise tax is applicable to oil and gas operations. Under the Hydrocarbon Law a rate of 10% is applicable to Production Sharing Contracts entered into before 2016;
- No import duty on goods such as materials, machinery, equipment, and consumer goods required for performing petroleum operations. However, goods should be re-exported at the end of their use;
- No VAT is imposed on companies operating in the oil and gas sector; and
- Losses can be carried forward for 5 years in the oil and gas sector (instead of the standard 3 years).