TAXATION AND INVESTMENT DECISIONS IN PETROLEUM
When governments apply high tax rates targeted at natural resource rent, there must be generous deductions in order to avoid investment disincentives. How generous is disputed. Based on standard theory and recommendations from the OECD and the IMF, the value of future deductions depends on the risks of these, and the companies’ after-tax weighted-average cost of capital cannot be applied directly. June 9, 2018.