Income Tax (Petroleum) Act · 2022 Revised Edition · Part · Imposition of Tax and Ascertainment of Chargeable Profits
10A. Taxation of production sharing operations
Official textFrom Attorney General's Chambers, unchanged
Notwithstanding any other provision of this Act, a company shall be subject to tax in accordance with this Act in respect of any petroleum operations carried out pursuant to a particular production sharing agreement
company
“company” means a company incorporated or registered in Brunei Darussalam under the Companies Act or under any law in force elsewhere, but does not include the company acting as a State Party in a petroleum mining Agreement in accordance with the Petroleum Mining Act;
(in this Act called “relevant production sharing operations”) in accordance with the provisions of this section. Where there is any inconsistency between the provisions of this section and any other provision of this Act, the provisions of this section shall prevail in relation to any relevant production sharing operations.
A company shall be subject to tax in accordance with this Act in respect of the relevant production sharing operations on a ring-fenced basis, as if (to the extent they are not in fact the only operations of the company concerned) the relevant production sharing operations were the only petroleum operations carried on by that company, so that (without limitation to the generality of the foregoing) no account shall be taken in the computation of the gross proceeds, chargeable profits or losses from the relevant production sharing operations of any proceeds, income or gains or any losses, expenses or other outgoings relating to any other operations or activities and no account shall be taken in the computation of the gross proceeds, chargeable profits or losses from such other activities of any proceeds, income or gains or any losses, expenses or other outgoings relating to the relevant production sharing operations.
petroleum operations
“petroleum operations” means searching for and winning or obtaining of petroleum in Brunei Darussalam by or on behalf of a company for its own account by any method or means in the course of a business carried on by a company engaged in such operations, and all operations incidental thereto, and the sale or disposal by such company or any other company carrying on business through a permanent establishment in Brunei Darussalam of petroleum so won or obtained, and includes the transportation within Brunei Darussalam by such companies of petroleum so won or obtained to any point of sale or delivery or export and any field process necessary to reduce petroleum so won or obtained to a marketable condition, but does not include — (a) any transportation of petroleum outside Brunei Darussalam; (b) any process of refining at a refinery; or (c) any dealings with products so refined;
The gross proceeds for any basis period of a company from the relevant production sharing operations shall be the aggregate value of the entire entitlement in respect of petroleum allocated to the company for that period in accordance with the terms of the relevant production sharing agreement. For this purpose, the amount and value of the company’s entire
petroleum
“petroleum” means any mineral oil or relative hydrocarbon and natural gas existing in its natural condition and casing-head petroleum spirit but does not include coal or bituminous shales or other stratified deposits from which oil can be extracted by destructive distillation;
Income Tax (Petroleum)
entitlement in respect of petroleum for that period will be determined in accordance with the terms of the relevant production sharing agreement:
production sharing agreement
“production sharing agreement” means any petroleum mining agreement described as such and entered into by a State Party in accordance with the Petroleum Mining Act;
Provided that the company’s entire entitlement in respect of petroleum for that period shall not include any petroleum allocated to the State Party
(whether as royalty petroleum, profit petroleum or otherwise) for that period in accordance with the terms of the relevant production sharing agreement.
The chargeable profits for any basis period of a company from the relevant production sharing operations shall be the remainder of the gross proceeds for the period from the relevant production sharing operations, determined in accordance with subsection (3), after only the following deductions shall have been made —
chargeable profits
“chargeable profits” means profits ascertained in accordance with the provisions of section 8 or 10A;
the value of the share of the company’s entire entitlement in respect of petroleum allocated for cost recovery for that period in accordance with the terms of the relevant production sharing agreement. For this purpose, the amount and value of such share of the company’s entire entitlement in respect of petroleum for that period will be determined in accordance with the terms of the relevant production sharing agreement; and
such other outgoings and expenses wholly and exclusively incurred by the company for the purpose of the relevant production sharing operations, as may be allowable as deductions for that period in accordance with the terms of the relevant production sharing agreement, but which are not taken into account in the calculation of the value referred to in paragraph (a).
In computing the tax assessable upon the chargeable profits for any basis period of any company from the relevant production sharing operations, no further deductions shall be made from the chargeable profits as determined for that period in accordance with subsection (4).
For the purposes of applying this Act to the relevant production sharing operations, the definition of “accounting period” in section 2(1)
accounting period
“accounting period” means — (a) a period of 12 months commencing on the date of the first sale or disposal of petroleum by or on behalf of a company engaged in petroleum operations, whichever event shall be the earlier, or commencing on such date within the calendar month in which such event occurs as may be selected by the company with the approval of the Collector; (b) such shorter period commencing as aforesaid and ending either on a date selected by the company with the approval of the Collector or on the date when the company ceases to be engaged in petroleum operations; (c) each subsequent period of 12 months during which the company is engaged in petroleum operations; or (d) any period of less than 12 months, being a period commencing on the day following the end of any such period of 12 months and ending on the date when the company ceases to be engaged in petroleum operations;
means —
by deleting paragraph (a) and by substituting the following new paragraph therefor —
“(a) a period commencing on the first day of the calendar quarter of a particular calendar year, in which the first
Income Tax (Petroleum)
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sale or disposal of petroleum by or on behalf of a company engaged in the relevant production sharing operations, whichever event shall be the earlier, occurs and ending on the last day of the same calendar year; or”;
by deleting paragraph (b) and by substituting the following new paragraph therefor —
“(b) such shorter period commencing as aforesaid and ending on the date when the company ceases to be engaged in petroleum operations;”.
For the purposes of assessing a company liable to tax in relation to the relevant production sharing operations, the Collector shall serve a notice of assessment stating the amount of chargeable profits, the assessable tax, the tax payable by such company and any such further information as is required in section 26(1) in any such currencies as may be specified for this purpose in the relevant production sharing agreement.
Collector
“Collector” means the Collector of Income Tax appointed under section 3 and includes for all purposes of this Act, except the powers conferred on the Collector by sections 38, 39 and 42, a Deputy Collector so appointed;
Sections 8, 8A, 9, 10, 12, 26(5) and 27 do not apply in relation to any relevant production sharing operations.
As long as there are dispute resolution proceedings in progress in accordance with the terms of the relevant production sharing agreement in respect of any issue which either of subsection (3) or (4) requires to be determined in accordance with the terms of such production sharing agreement, then, for the purposes of section 30, no assessment shall be regarded as final and conclusive for all purposes of this Act as regards the amount of the chargeable tax to the calculation of which the issue relates, until such dispute resolution proceedings have been completed and, in accordance with the results of such proceedings, an assessment is made.
Terms defined in s 2
accounting period
Defined · s 2“accounting period” means — (a) a period of 12 months commencing on the date of the first sale or disposal of petroleum by or on behalf of a company engaged in petroleum operations, whichever event shall be the earlier, or commencing on such date within the calendar month in which such event occurs as may be selected by the company with the approval of the Collector; (b) such shorter period commencing as aforesaid and ending either on a date selected by the company with the approval of the Collector or on the date when the company ceases to be engaged in petroleum operations; (c) each subsequent period of 12 months during which the company is engaged in petroleum operations; or (d) any period of less than 12 months, being a period commencing on the day following the end of any such period of 12 months and ending on the date when the company ceases to be engaged in petroleum operations;
chargeable profits
Defined · s 2“chargeable profits” means profits ascertained in accordance with the provisions of section 8 or 10A;
Collector
Defined · s 2“Collector” means the Collector of Income Tax appointed under section 3 and includes for all purposes of this Act, except the powers conferred on the Collector by sections 38, 39 and 42, a Deputy Collector so appointed;
company
Defined · s 2“company” means a company incorporated or registered in Brunei Darussalam under the Companies Act or under any law in force elsewhere, but does not include the company acting as a State Party in a petroleum mining Agreement in accordance with the Petroleum Mining Act;
disposal
Defined · s 2“disposal” and “disposed of”, in relation to petroleum owned by a company engaged in petroleum operations, mean respectively — (a) delivery, without sale, of petroleum to a refinery for refining by or on behalf of the company; and (b) delivered, without sale, to a refinery for refining by or on behalf of the company;
petroleum
Defined · s 2“petroleum” means any mineral oil or relative hydrocarbon and natural gas existing in its natural condition and casing-head petroleum spirit but does not include coal or bituminous shales or other stratified deposits from which oil can be extracted by destructive distillation;
petroleum operations
Defined · s 2“petroleum operations” means searching for and winning or obtaining of petroleum in Brunei Darussalam by or on behalf of a company for its own account by any method or means in the course of a business carried on by a company engaged in such operations, and all operations incidental thereto, and the sale or disposal by such company or any other company carrying on business through a permanent establishment in Brunei Darussalam of petroleum so won or obtained, and includes the transportation within Brunei Darussalam by such companies of petroleum so won or obtained to any point of sale or delivery or export and any field process necessary to reduce petroleum so won or obtained to a marketable condition, but does not include — (a) any transportation of petroleum outside Brunei Darussalam; (b) any process of refining at a refinery; or (c) any dealings with products so refined;
production sharing agreement
Defined · s 2“production sharing agreement” means any petroleum mining agreement described as such and entered into by a State Party in accordance with the Petroleum Mining Act;
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