The law provides the fiscal regime framework applicable to hydrocarbon operations and aims to:
- regulate the obligation for the tax on the royalty, the profit tax for the hydrocarbon operations, as well as their administration;
- manage the extent to which a hydrocarbon agreement may affect the obligation to impose tax, as well as applicable local and national taxes.
The object of this law are the following entities:
- Legal persons performing authorized hydrocarbon operations;
- Legal persons that perform hydrocarbon operations on land (onshore);
- The above entities that perform directly or indirectly hydrocarbon operations (referred to as "subcontractors"), and meet one of the following criteria:
- the subcontractor performing hydrocarbon operations is considered a "related party" to the contractor according to the definition of the law “On Income Tax”;
- the subcontractor is an operator in relation to hydrocarbon operations and performs activities which are essential for hydrocarbon operations, where the level of activities invoiced by the subcontractor is at least 25% of the total expenses for hydrocarbon operations;
- the main purpose of the agreement concluded with the subcontract is to avoid the application of the tax regime under this law and to benefit from the preferential tax rate under the law “On Income Tax”.