The future prospects of the Romanian energy system could change once the exploration and operation of oil and gas deposits intensify in Romania’s exclusive economic area of the Black Sea. World leaders in the field already have works on the way and plan to launch new projects; however, in practice, they are faced with insufficiently developed and unclear laws in respect of the applicable tax and customs treatment.

“The Black Sea perimeter and the natural resources pertaining thereto are enclosed on the list of reputed investors in the oil and natural gas industry. Nevertheless, the increasing interest for Romania’s exclusive economic area involves various challenges as regards the taxation and treatment of these economic activities from the tax and customs standpoint. We refer to the material, human, and technologic resources concentrated on the operation platforms and machinery, as well as to the ships sailing through this area, for the benefit of the platforms for which taxes and levies become applicable, which are insufficiently regulated by the laws in force. In the context of multiple interpretations and controversies generated by the current legal frame, we believe it is vital to extend the current provisions, clarify certain aspects and definitions, in order to intensify and increase the efficiency of exploration and operation actions that could entail a considerably positive impact at the economic level”, said Ionuţ Bohâlţeanu, Partner Muşat & Asociaţii – Tax Advisory, during the “TaxEU – Taxation in Romania, between present and future” conference, organised by Evensys, in partnership with major consulting and law firms. The event brought together officials from the Ministry of Finance and the National Agency for Fiscal Administration, along with reputed experts in taxation law.

Ones of the most important issues affecting oil companies are the taxation of the profit yielded from the activity performed by non-resident legal entities in Romania’s exclusive economic area, the applicable VAT regime, as well as the fiscal obligations of non-resident individuals – workers on the exploration and operation platforms in the Black Sea.

“Tax authorities attempted to clarify the regime of the tax on profit by introducing, starting with February 1, 2013, new provisions in the Fiscal Code. However, all they did was to create even greater confusion in relation with this withholding tax. What was uncertain before this change is now unclear”, specified Ionuţ Bohâlţeanu, Partner Muşat & Asociaţii – Tax Advisory.

The team of Muşat & Asociaţii – Tax Advisory holds significant experience in managing complex issues of tax law occurring in the natural resources sector, representing a comprehensive portfolio of national and international corporations in landmark projects, among the most recent being: assisting Sterling Resources, a top oil company from Canada, in relation to all VAT and customs matters pertaining to the activities carried out in the exclusive economic area of the Black Sea, Transocean, the world leading contractor of offshore drilling, in the customs procedures for the platform to be used in the future drilling operations in Romania’s exclusive economic area, as well as in respect of social contributions, but also Petrofac Facilities Management LTD., a leading international provider of facilities solutions to the oil & gas production and processing industry, in connection with the negotiation and implementation of a production enhancement services agreement for several oil deposits of OMV Petrom.

The expertise of Muşat & Asociaţii – Tax Advisory is constantly recommended by the international legal guides – Chambers & Partners and PLC Which Lawyer? – placing the firm and its lawyers among top specialists in Romania.

In addition, Muşat & Asociaţii – Tax Advisory is recommended among the leaders in the field on the local market by the British publisher International Tax Review, in its annual review World Tax 2013, having proven significant expertise in all four areas under analysis: transfer prices, corporate tax, indirect tax and fiscal litigation. According to this review, our tax advisory team “developed its expertise in all areas of taxation and won numerous high-profile projects”.

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