Hydrocarbons: Government examines granting reduced rates of royalty, income tax

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ALGIERS-The Government has examined a draft executive decree defining the modalities of granting reduced rates of the hydrocarbon royalty and income tax, said the Prime Ministry in a communiqué.

This draft decree was discussed at a Government meeting held Wednesday by videoconference and chaired by Prime Minister Abdelaziz Djerad, said the same source.

The Government members listened to two presentations by the Minister of Energy and Mines on two draft executive decrees pursuant to law No. 19-13 dated 11 December 2019 governing hydrocarbon-related activities.

A draft decree defining the terms of granting reduced rates of hydrocarbon royalty and income tax on hydrocarbons has been examined.

The law 19-13 has set the rate of hydrocarbon royalty and income tax on hydrocarbons on the quantities of hydrocarbons extracted from a perimeter of exploitation.

However, under certain conditions related to the geological complexity of deposits or technical difficulties of extraction of hydrocarbons, the expected profitability of the deposit could be insufficient compared to the amount the investment made.

In order to deal with this situation and encourage investment in the field of exploration and production of hydrocarbons, the said law has provided for reduced rates of these two taxes.

In this regard, this draft executive decree defines the terms of granting this reduction, which has an exceptional character.

The other draft executive decree sets the rates of depreciation of investments, which will be taken into account when calculating the tax on the result of the year, achieved by the national company or its foreign partner under the contracts of hydrocarbons.

APS

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