Fitch: Kazakh oil, gas companies face tax burden

Fitch Ratings said it said that the overall tax burden on Kazakh oil and gas companies, levied by a new tax code introduced at the beginning of 2009, is not likely to change significantly given the offsetting nature of other tax initiatives.

"Overall, in a low price environment the new tax regime is expected to be less burdensome for the oil and gas industry compared with the older system," said Angelina Valavina, a director in Fitch's energy, utilities and regulation team.

Furthermore, Fitch said it believes that it is likely to remain less punitive than sector taxation in Russia and thus should not adversely impact incentives to invest in Kazakhstan's oil and gas sector.

The introduction of a new mineral extraction tax in replacement of royalties implies a higher tax load for an upstream company, as the tax rates are set in a range of 5% to 18% for 2009, depending on production volume whereas most royalty rates ranged within 2% to 8%, Fitch noted.

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