Turkey Upstream Fiscal and Regulatory Report – Corporate Income Tax Increases to 22% for 2018 to 2020

Pages: 16 Published: February 28, 2018 Report Code: GDGE0139UFR

In December 2017, Turkey increased its corporate income tax from 20% to 22% for the tax years 2018, 2019 and 2020, though the council of ministers has the authority to adjust the rate between 20% and 22%. Apart from the corporate income tax change, Turkey’s fiscal and regulatory framework has remained stable for the past sixty years, with licenses are issued under a simple royalty-tax scheme, levying a 12.5% royalty rate. The sector was slightly reformed with the introduction of the new petroleum law back in 2013, which reduced the participation of national oil company TPAO. Blocks are licenses through an open-door-policy, and no license bidding rounds have been held or are announced for 2018.

“Turkey Upstream Fiscal and Regulatory Report – Corporate Income Tax Increases to 22% for 2018 to 2020”, presents the essential information relating to the terms which govern investment into Turkey’s upstream oil and gas sector. The report sets out in detail the contractual framework under which firms must operate in the industry, clearly defining factors affecting profitability and quantifying the state’s take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for Turkey’s upstream oil and gas investment climate.

Scope

Overview of current fiscal terms governing upstream oil and gas operations in Turkey

Assessment of the current fiscal regime’s state take and attractiveness to investors

Charts illustrating the regime structure, and legal and institutional frameworks

Detail on legal framework and governing bodies administering the industry

Levels of upfront payments and taxation applicable to oil and gas production

Information on application of fiscal and regulatory terms to specific licenses

Outlook on future of fiscal and regulatory terms in Turkey

Reasons to Buy

Understand the complex regulations and contractual requirements applicable to Turkey’s upstream oil and gas sector

Evaluate factors determining profit levels in the industry

Identify potential regulatory issues facing investors in the country’s upstream sector

Utilize considered insight on future trends to inform decision-making

Table of Contents

1. Table of Contents

1. Table of Contents 1

1.1. List of Tables 2

1.2. List of Figures 2

2. Regime Overview 3

3. State Take Assessment 5

4. Key Fiscal Terms 6

4.1. Royalties, Bonuses and Fees 6

4.1.1. Rental Fees 6

4.1.2. Royalties 6

4.2. Direct Taxation 7

4.2.1. Corporate Income Tax 7

4.2.2. Deductions and Depreciation 7

4.2.3. Withholding Tax 8

4.3. Indirect Taxation 8

4.3.1. Value Added Tax 8

4.3.2. Stamp Duties 8

4.3.3. Real Estate Tax 8

4.3.4. Customs Duties 8

5. Regulation and Licensing 9

5.1. Legal Framework 9

5.1.1. Governing Law 9

5.1.2. Contract Type 10

5.1.3. Title to Hydrocarbons 10

5.2. Institutional Framework 11

5.2.1. Licensing Authority 11

5.2.2. Regulatory Agency 11

5.2.3. National Oil Company 12

5.3. Licensing Process 12

5.3.1. Licensing Rounds 12

5.3.2. Pre-qualification 12

5.3.3. Bidding 12

5.4. License Terms 12

5.4.1. Duration and Relinquishments 12

5.4.2. Work Obligation 13

5.5. Local Content 13

5.6. Contract Stability 13

6. Outlook 14

7. Appendix 15

7.1. Contact Us 15

7.2. Disclaimer 15

List of Tables

1.1. List of Tables

Table 1: Regime Overview 3

Table 2: Turkey, Annual Rental Fees, Licenses Granted Prior to June 11, 2013 6

Table 3: Turkey, Corporate Income Tax 7

List of Figures

1.2. List of Figures

Figure 1: Turkey, Regime Flow Chart 4

Figure 2: Turkey, Indicative NPV10/boe, IRR and State Take Comparison, Regional 5

Figure 3: Turkey, Legal Framework 9

Figure 4: Turkey, Institutional Framework 11

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