For the host governments, especially in the developing countries, capital gain tax and corporate income tax are important source of revenues. For IOCs and any other multinationals (or transnationals) capital gain tax and corporate income tax are important in the avoidance of double taxation.
In Iraq the signed contracts with IOCs provide elaborated provisions pertaining to corporate income tax but no ”specific” reference was made to capital gain tax.
The signed service contracts for upstream petroleum development that are concluded pursuant the four bid rounds, and for Al Ahdab oilfield, the Joint Venture contract related to Basra Gas Company (BGC), and the model contract for the Nassirya Integrated Project (NIP) (oilfield development and refinery), are all subject to corporate income tax.
Corporate income tax on IOCs increased in 2010 from 15 % to 35%, and the State Consultative Council/ Majliss Shaura Aldawlah’ issued Instruction No. 5 of 2011, applying the 35% tax rate to activities even if they are done by individuals and sub-contractors.
These singed contracts provide "Stabilization Clause" protecting the IOCs for any future increases in corporate income tax. The stabilization clause is confined to corporate income tax only, and thus does not provide or construed to provide shelled against imposition of capital gain tax.
Though the signed contracts does not mention specifically capital gain tax the term “Law”, which all these signed contracts are subject to, is defined widely to open opportunity for capital gain tax imposition.
Many cases of Merger and Acquisition have taken place in the Kurdistan Region but it is not known whether KRG has imposed or received (as it should be) any capital gain tax resulting from these deals.
As for the rest of Iraq one case of Participating Interest Assignment has taken place and another one is in the pipeline.
A few weeks ago ExxonMobil assigned 25% of its interest in West Qurna 1 to the Chinese CNPC and another 10% to Indonesia's Pertamina.
Capital Gain Tax on IOCs in Iraq | Iraq Business News http://t.co/B1v4k4XzGn
New Blog Post Capital Gain Tax on IOCs in Iraq - By Ahmed Mousa Jiyad. Any opinions expressed are those of the aut... http://t.co/m4JoRfZV8H
Capital Gain #Tax on #IOCs in #Iraq http://t.co/ASGoo3Fd7E #Local_News @iraqbiznews