Section 24, No. The Extractive Industries Revenue Act 2018No. The Extractive Industries Revenue Act 2018

(1) Subject to subsections (1) and (3), in calculating aperson’s income from a separate petroleum operation for a year of assessment the following shall be included - (a) the greater of the market value and the actual sale price of petroleum obtained from the licence area that is disposed of or treated as disposed of during the year; (b) compensation received, whether under a policy of insurance or otherwise, in respect of loss or destruction of petroleum from the licence area; (c) amounts received for the sale of information pertaining to the operations or petroleum reserves; (d) amounts required to be included under section 28 for a surplus in a decommissioning fund; (e) amounts required to be included under paragraph 5 of the Second Schedule including the disposal of an interest in a petroleum right; and (f) any other amounts derived by the person during the year from or incidental to the operation that are included in calculating income under the Income Tax Act, 2000. (2) The market value of petroleum shall be determined in accordance with paragraph 2 of the Second Schedule. (3) Petroleum obtained from a separate petroleum operation that is used to pay royalties in kind as referred to in subsection (4) of section 21 shall not be included in calculating the income of the separate petroleum operation. Income From operations. No. The Extractive Industries Revenue Act 2018No. The Extractive Industries Revenue Act 201828 (6) Where two or more persons hold a petroleum right, they shall calculate their chargeable income from petroleum operations with respect to that right separately, but shall do so as though they were associated persons. (7) Transfer pricing in accordance with section 95 of the Income Tax Act, 2000 shall apply to subsection (6). 23. (1) Subject to this section, petroleum operations pertaining to each petroleum right shall constitute a separate petroleum (2) The following rules shall apply after approval of a development and operation plan within a petroleum licence area– (a) petroleum operations conducted pursuant to the petroleum right to the date of approval and petroleum operations conducted with respect to the development and operation area after that date shall be treated as conducted with respect to the same separate petroleum operation; and (b) from the date of approval, petroleum operations conducted pursuant to the petroleum right that are not in respect of the development and operation area shall be treated as a new separate petroleum (3) Where– (a) there is approval of a development and operation plan within a petroleum licence area (whether or not there are prior plans approved within the licence area); and Separate (b) subsequently (but before any further approval of a development and operation plan within the petroleum licence area) the holder of the petroleum licence relinquishes all of the licence area that is not subject to an approved development and operation plan (whether the approval referred to in paragraph (a) or an earlier approval), the petroleum operations conducted in the relinquished area referred to in paragraph (b) from the date of approval shall be treated as conducted with respect to the area of the development and operation plan referred to in paragraph (a) and therefore the same separate petroleum operation as conducted in that area. (4) The Minister responsible for finance, in consultation with the Minister responsible for the management of petroleum matters, may by statutory instrument and for the purposes of this Act – (a) prescribe circumstances in which and the extent to which petroleum operations conducted pursuant to a pipeline permit shall be treated as conducted with respect to the same separate petroleum operation as that conducted with respect to a development and operation area serviced by the pipeline; and (b) apportion pipeline costs between petroleum operations conducted in more than one development and operation area. (5) In this section, “pipeline permit” means a permit granted under section 76 of the Petroleum (Exploration and Production) Act, 2011. (6) The Minister responsible for finance, in consultation with the Minister responsible for the management of petroleum matters, may by statutory instrument make further provision for the determination of separate petroleum operations including adjacent petroleum rights and merging of petroleum rights. No. The Extractive Industries Revenue Act 2018No. The Extractive Industries Revenue Act 201840 (c) “relevant licence area” means that part of a petroleum licence area that becomes the development and operation area in which the production activities referred to in subsection (1) are conducted. 36. (1) Where a person transfers an interest in a petroleum right during a year of assessment together with the person’s interest in the separate petroleum operation conducted under that right, for the purposes of calculating any petroleum resource rent tax payable by the transferee, the transferee shall be treated as– (a) having the same accumulated net expenditure for the petroleum operation for the year of assessment preceding the transfer as the transferor had (if any); (b) incurring the same deductible expenditure for the petroleum operation during the year of transfer as the transferor did (if any); (c) deriving the same gross receipts for the petroleum operation during the year of transfer as the transferor did (if any), and (d) having paid the same amount of instalments under section 45 during the year of transfer as the transferor did (if any). (2) Where a person transfers only a part of an interest in a petroleum right, the amounts referred to in subsection (1) shall be apportioned according to the amount of the interest transferred. Transfer of Petroleum Rights (3) Where expenditure, receipts or payments are attributed to a transferee under this section, such expenditure, receipts or payments shall not be attributed to the transferor. 37. (1) In the circumstances as provided for in section 27, the surplus in a decommissioning fund shall be included in calculating the chargeable income of a person from a separate petroleum (2) The inclusion referred to in subsection (1) shall also be included in gross receipts for the purposes of calculating petroleum resource rent tax. 38. (1) A petroleum right holder conducting processing of petroleum shall be subject to income tax for those activities. (2) Decommissioning and decommissioning funds as set out in paragraph (d) of subsection (1) of section 24, paragraphs (d) and (e) of subsection (1) of section 25 and section 28 shall apply, with necessary adaptations, in calculating a petroleum right holder’s income from a business that includes processing of petroleum, but only to the extent the expenses and funds relate to that processing. (3) Paragraph (c) of subsection (1) of section 32 and section 32A of the Income Tax Act, 2000 shall apply to allowable losses of a person from conducting a business that includes processing of petroleum so that tax payable may be reduced to 15 percent of the tax that would be due if losses were not carried forward. PART IV–EXTRACTIVE INDUSTRYAGREEMENTS 39. (1) In applying and administering a law relating to revenue the Commissioner-General shall not take into account any extractive industry agreement unless the Minister responsible for Finance has– Obligation to take account of extractive industry agreements Decommissioning fund positive balance Processing No. The Extractive Industries Revenue Act 2018No. The Extractive Industries Revenue Act 2018 39 (3) The Minister responsible for finance may by statutory instrument make regulations prescribing the time limit within which the Commissioner-General shall conduct the audit and certification. (4) In this section- (a) “relevant deductible expenditure” means expenditure- (i) incurred by a person exclusively on exploration in the relevant licence area and no more than seven years before the date of commencement referred to in subsection (1); and (ii) of a type referred to in section 34 (other than paragraph (f) of subsection (1) of section 34) presuming that the petroleum operation in question is that conducted under the petroleum licence prior to the commencement; (b) “relevant gross receipts” means receipts– (i) derived by the person from exploration in the relevant licence area and no more than seven years before the date of commencement referred to in subsection (1); and (ii) of a type referred to in section 33, presuming that the petroleum operation in question is that conducted under the petroleum licence prior to the commencement; and A p p r o v e d Fiscal Stability Clause. (a) certified a true and correct copy of that agreement; and (b) made that copy available to the Commissioner-General (whether through a public register or otherwise). (2) Subject to subsection (1) and section 41, in the case of an extractive industry agreement concluded before the commencement of this Act, the Commissioner-General shall apply and administer a revenue law to a party to the agreement after taking into account any modification or protection of the revenue law required by the agreement. (3) Subject to subsection (1) and section 41, in the case of an extractive industry agreement concluded on or after the commencement of this Act, the Commissioner-General shall apply and administer a revenue law to a party to the agreement after taking into account any approved fiscal stability clause contained in the agreement. (4) Except as provided for in subsections (2) and (3), the Commissioner-General shall apply and administer any law relating to revenue without taking account of extractive industry agreements. 40. (1) Subject to subsection (2), a fiscal stability clause in an extractive industry concluded on or after the commencement of this Act shall be an approved fiscal stability clause to the extent that it protects a mineral or petroleum right holder from– (a) the imposition of new discriminatory taxes or Government charges that does not exist at the date the agreement is concluded; (b) the alteration of an existing tax or Government charge in a discriminatory manner; or No. The Extractive Industries Revenue Act 2018No. The Extractive Industries Revenue Act 2018 31