In the context of rising natural gas prices, the specific effective tax rate on offshore production in Romania has reached 51% in 2021, more than doubling and 10 times the European average in 2020.
- Basically, in 2021 the state collected half of the revenues realized from offshore natural gas production alone through
royalties and tax on additional offshore income. - Moreover, in the fourth quarter of 2021 it has taxed by almost T100% the deemed additional income for the production of
offshore natural gas.
Mentions:
- The evolution of the reference price of natural gas for offshore production taxation (linked to the Central European Gas Hub - CEGH Day Ahead), uncorrelated with the evolution of the price realized on the Romanian market, has significantly increased the tax burden on offshore gas production in Romania.
- Thus, in 2021, the effective tax rate in Romania reached 51% of revenues, which represents an increase of 2.3 times compared to the effective tax rate in 2020, i.e. 23%. If we look at the quarterly structure of the effective tax rate, we observe that it reached 78% of revenues in Q4 2021, as a result of the upward trend in the price of natural gas.
- When compared to the average effective tax rate on Europe's offshore gas production in 2020 (5.3%), this amounts to 10 times higher.
- As for the effective tax rate for onshore and offshore natural gas production, it was 44% of revenues in 2021.
- Unless the Offshore Law is amended, in order to ensure the stability and competitiveness of the fiscal regime, the decision to invest in the Black Sea resources will continue to be postponed, with a major impact on the Romanian energy sector and implicitly on the economy. Moreover, based on the projects in the Black Sea, Romania may become the first producer of natural gas in the European Union, once the Groningen field in the Netherlands is closed (EBN Annual Report, 2019/2020) and the opportunities generated by the energy transition.
