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In 2016-2017, Olympex Advisers provided consulting services on amending the subsoil use contract, during the change in the procedure for taxation of the Subsoil User when transferring oil to a bitumen plant for the preparation and purification of oil to obtain marketable oil and tar and production of road bitumen from tar.

The technological processes of oil preparation for transportation and processing, technological standards of production, preparation, and transportation of hydrocarbons, technological processes of oil preparation at a bitumen plant were analyzed for compliance and possibility of attributing the technological process associated with additional oil preparation – cleaning from heavy fractions (tar) and obtaining marketable oil thereby – to the field of subsoil use.

Olympex Advisers experts provided the following work:

• Analysis of tax risks of a Subsoil User arising from the transfer of oil to a bitumen plant and production of tar as a separate commodity product for each considered option of the procedure for taxation of a subsoil user.
• A new taxation model is provided and field profitability estimates are given, including a forecast of the expected consequences for the subsoil user with a new scheme for additional preparation of part of oil, including for assessing the tax burden of the field, taking into account the presented position of state bodies.
• Obtaining a resolution from the State Revenue Committee of the Ministry of Finance of the Republic of Kazakhstan on the classification of refined oil as “commodity oil” in accordance with the FEACN code of EAEU with the attribution to the commodity subheading.
• Support services for the approval by state bodies of a draft addendum to the contract, as well as the draft work program, and the signing of an addendum to the subsoil use contract at the competent authority.

Project team

Diyar Yereshev, Nuraly Essen, Dana Omarova, Baurzhan Kusherbek, Anuar Kapbassov, Elmira Yermagambetova