Fiscal Regime for The JDA
Under the MTJA Agreement, the MTJA Act 1990 and relevant Petroleum Income Tax Acts, the MTJA is empowered to award, with approval of the Governments, contract for the exploration and exploitation of petroleum resources in the JDA. The contract has to be in a form of Production Sharing Contract (PSC) and includes the following:
Royalty payable by Contractors to MTJA at 10% of gross production for remittance to the Governments (5% to each Government).
Cost Recovery for contractors of up to a maximum 50% of gross production.
Profit Split of 50:50 between MTJA and Contractors of the remaining portion of the gross production after deducting royalty and cost recovery.
Research Cess to be paid by Contractors to MTJA at 0.5% of their share of cost recovery and profit split.
Decomissioning Fund to be paid by Contractors to MTJA based on actual production and estimated reserve.
Export Duty to be paid by Contractors to the Governments at 10% of profit oil for condensate sold outside Thailand and Malaysia.
Petroleum Income Tax to be paid to the Governments:
|First 8 years of production||0%||of taxable income|
|Next 7 years||10%||of taxable income|
|Subsequent years||20%||of taxable income|
Contract period: 35 years to be subdivided as follows:
|Holding (gas only)||-||5|
Procurement - The Contractors shall purchase or acquire equipment, facilities, goods, materials, supplies including services and research facilities, professional or otherwise, from sources in Malaysia or Thailand where technically and economically feasible.
Custom & Taxation - Goods, equipments and materials imported for petroleum operations in the JDA are accorded duty-exemption.
Incomes derived from activities/services in the JDA are subject to taxes by both Malaysia and Thailand under their respective legislations, subject to reduction by 50% of the tax chargeable by each country.