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An Analysis of Petroleum Fiscal Regime in Thailand

  • Puree Sirasoontorn

    ()

    (Faculty of Economics, Thammasat University, Bangkok, Thailand)

  • Napon Suksai

    ()

    (Faculty of Economics, Thammasat University, Bangkok, Thailand)

Registered author(s):

    This paper analyzes the Thai petroleum fiscal regimes, so called Thailand I and Thailand III, under the concession system for granting petroleum exploration and production rights. The analytical issues include the sharing of benefit between the government and concessionaires, assurance of the government’s share of the profits, and the incentive for entrepreneurs to invest and generate efficient operation. The findings reveal that the Thai petroleum regimes are not flexible because only one set of fiscal instruments is applied. The regimes cannot be adjusted to either the context of project fields and operation or the uncertainty of petroleum price. However, the regimes could generate sufficient sharing of benefit although the share of government cannot be firmly assured. The Thai government revenue is based only on the royalty and petroleum income tax; it does not receive as much a share of the profit as the neighboring countries have been receiving under their sharing systems, which is based on production and the project contracts granted according to types of petroleum and exploration as well as production areas. The Thai petroleum regimes, however, give enough incentive to investors. If the Thai government continues the concession system, it should consider applying an additional fiscal instrument, i.e. “supplementary income tax” to increase government revenue.

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    Article provided by Kasetsart University, Faculty of Economics, Center for Applied Economic Research in its journal Applied Economics Journal.

    Volume (Year): 20 (2013)
    Issue (Month): 1 (June)
    Pages: 23-46

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    Handle: RePEc:aej:apecjn:v:20:y:2013:i:1:p:23-46
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