Tax payers in the performance of the PSA are the organizations - investors of the agreement.
For a more complete definition of the concept of taxpayer It should be clarified who is the investor of the agreement.
The investor of the agreement is a legal entity or an association of legal entities created on the basis of a joint venture agreement, which invests its own, borrowed or attracted funds in prospecting, exploration and extraction of mineral raw materials and is a user of subsurface resources on terms PSA.
A taxpayer has the right to instruct his authorized representative, called the operator, to fulfill his duties related to the application of this special tax regime
In order to apply this tax regime, the taxpayer must submit to the tax authority an appropriate written notification, as well as a signed production sharing agreement. At the same time, the taxpayer is required to submit one more important document. The matter is that before the signing of an agreement on the relevant subsoil plot, an auction should be held to grant the right to use it not on the terms of production sharing, but on general grounds determined by the Subsoil Law. And only if, under these conditions, the auction is declared invalid due to the absence of those wishing to take part in it, this subsoil plot can be transferred to the development on the terms of production sharing. In this regard, the taxpayer must submit to the tax authority also a decision to approve the results of this auction and to recognize it as invalid due to the absence of participants.
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Taxes payable when performing a PSA
The most important characteristic feature of the taxation system in the performance of the PSA is the replacement of payment of a portion of taxes and fees established by United States tax legislation, a division of products produced in accordance with the terms of a specific agreement. At the same time, it should be borne in mind that the US Tax Code provides for the possibility of using two options for the division of products.
According to the first, the main version in the agreement, conditions and order of distribution between the state and the investor of both produced and profitable products should be provided. At the same time, the maximum level of the share of production to be transferred to the investor's ownership to recover its costs (compensation products) should not exceed 75%, and in the case of production on the continental shelf - 90% of the total output.
Profitable products represents the products produced, less the part of it, the equivalent of which is used to pay the mineral extraction tax, and also after deducting compensation products. The law does not provide for the marginal rates of distribution of profitable products. The order and conditions for its distribution must be established in each specific agreement.
Consider the first variant of the production section on the conditional example.
In the subsoil plot transferred to the investor for development on the terms of the PSA, 300 thousand tons of oil were produced for the tax period (calendar year). According to the law, the investor must pay MET. Its value is determined in the amount of 252 million rubles, or $ 8.9 million equivalent to 24.8 thousand tons of oil (the calculation of the amount of MET will be considered in Example 3). The costs incurred by the investor to implement the agreement, which should be reimbursed to him, amount to $ 65.6 million or 1856.5 million rubles, which is equivalent to 182.4 thousand tons of oil. The share of compensatory products is 60.8% of the total output (182.4: 300x100%), which does not exceed the limit set by the US TC of 75%.
Therefore, the amount of compensation products can be adopted in the amount of 182.4 thousand tons of oil. According to the agreement, profitable products are distributed in the following proportions: 40% to the investor, 60% to the United States. Define the size of profitable products.
It is 92.8 thousand tons (300 thousand tons, 24.8 thousand tons, 182.4 thousand tons). Thus, the investor should receive 37.12 tons (40% of 92.8 thousand tons), and the United States - 55.68 thousand tons of oil (60% of 92.8 thousand tons).>
According to the US NC the second option can only be used in certain cases, as an exception. When using this option, the agreement should provide for the procedure and conditions for determining the shares of the products produced by the state and the investor. And the proportions of such distribution are determined depending on the geological-economic and cost assessment of the subsoil plot, the indicators of the feasibility study of the agreement, and the technical design. At the same time, the US NC stipulates that the share of the investor should not exceed 68% of the output produced and, accordingly, the state share should not be lower than 32%.
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If the production section is produced in accordance with the first option, the taxpayer must pay the following taxes, fees and charges: VAT, corporate income tax, mineral extraction tax, payments for the use of natural resources, payment for negative impact on the environment Wednesday, payment for the use of water bodies, state fee, customs duties, land tax and excises.
However, the law establishes that the amounts of the above taxes, with the exception of the corporate profit tax and the mineral extraction tax, should be subsequently returned to the investor as part of the reimbursable expenses.At the same time, a taxpayer can be exempted from paying regional and local taxes and fees according to a decision of the relevant legislative or representative body of state power or a representative municipal authority. At the same time, the US Tax Code establishes that in the case of applying the first version of the product section, the taxpayer should not pay tax on the property of organizations in respect of fixed assets, intangible assets, reserves and costs that are on its balance sheet and are used exclusively for the implementation of the activities stipulated in the agreement. It is also exempted from the payment of the transport tax in the part of its vehicles (with the exception of passenger cars) used exclusively for the purposes of the agreement. In the case of the use of this property and vehicles not for purposes related to the performance of work under the agreement, they should be taxed in accordance with the generally established procedure, unless regional and local authorities make a different decision.
If the agreement providing for the second version of the section of manufactured goods is fulfilled, the investor must pay the state duty, customs duties, VAT and make payments for the negative impact on the environment. The US Tax Code does not provide for subsequent compensation of taxes paid in this case.
As in the first variant, a taxpayer can be exempted from paying regional and local taxes and levies by decision of the relevant legislative or representative body of state power or a representative municipal body.
Regardless of the product options used, the taxpayer is exempted from payment of customs duties in respect of goods imported into the United States customs territory for the performance of works under the agreement stipulated in the work programs and cost estimates approved in accordance with the procedure established by the agreement, made in accordance with the terms of the agreement and exported from the United States customs territory.
If the investor is not exempted from paying regional and local taxes and fees, then his costs of paying these taxes and fees should be reimbursed for the amount of taxes and fees actually paid by reducing the proportion of the output produced to the relevant US entity accordingly.>
Thus, summarizing the list of taxes paid when the PSA is implemented, the following conclusions can be drawn.
Under the first version of the agreement the taxpayer actually pays a tax on profits and a tax on the extraction of minerals in respect of federal taxes. He should not pay customs duty, property tax and transport tax (from turnover and property related to the implementation of the agreement). The taxpayer's expenses for the payment of all other taxes (if he is not exempted from payment by regional or local authorities) must be reimbursed to him in the future as part of compensatory products.
Under the second version of the agreement the taxpayer actually pays (without further compensation) the state duty, customs duties, VAT and a fee for negative impact on the environment. He has been released from all other federal taxes. The regional and local taxes paid by the taxpayer, if he is not exempt from payment, should be reimbursed to him later.
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