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Q1. How does the government collect revenues from the petroleum activities?
The total government revenues are the sum of three sources of income that go to the State: the royalty, the state’s share of profit petroleum and the taxes paid by the right holders. Click here to view the Lebanon petroleum fiscal system diagram.
Q2. What is a royalty?
As the owner of petroleum resources, the State is entitled to receive a royalty that is a percentage of the petroleum extracted from the reservoirs.
Q3. What is profit petroleum?
Profit petroleum is the remaining produced petroleum after extracting the royalty and the cost paid during the exploration and production of oil and gas.
Q4. What types of taxes does the government collect?
Based on the taxation law, several types of taxes are applicable, such as the corporate income tax, the withholding taxes, the employee tax, and the Value Added Tax (VAT).
Q5. Why is it important to monitor costs?
It is important to avoid unnecessary costs and monitor expenses and revenues closely to prevent corruption and inefficiencies, to maximize the income for the country and to recover the full value of our prospective resources, while taking into consideration quality and safety standards.
The Lebanese Petroleum Administration (LPA) monitors costs for cost recovery purposes. Also, the LPA monitors day to day operations and audits right holders’ accounting and financial procedures to make sure they are consistent with the provisions of the Exploration and Production Agreement. The Ministry of Finance monitors costs for tax deduction purposes.
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