The government's take in profits from the sale of natural gas is made up of three components:
1. Corporate Income Tax (CIT) – 23% as of 2022.
2. Royalties - 12.5% from the market value at the wellhead, collected from the beginning of production. The royalties are deductible as expenses for the petroleum profit levy (see below).
3. Petroleum Profit Levy – enacted in the Petroleum Profit Tax Law of 2011. The profit levy only comes into effect after a 150% return on the initial investment. It is a progressive tax, ranging from 20% to 50% according to the increase in profits, and is based on an R Factor formula, as follows:
R Factor = Net cumulative revenues / Exploration and development expenses
Total government take including the three components listed above is estimated at 52-62%.