Taxation of petroleum production in Nigeria
This thesis develops an economic model of exploration and extraction of a non-renewable resource. The model is then used to examine the effects of a variety of taxes on the exploration and production decisions of an extractive firm. The effects of the tax policies are analyzed by solving an optimization problem in which the firm is assumed to maximize the present value of cashflows from resource extraction over a finite planning horizon, using non-linear techniques. The tax analysis shows that royalties, severance taxes, property taxes, profit taxes with cost or percentage depletion, profit tax with royalty expensing, and progressive income tax may induce a change in the firm's optimal exploration and extraction decisions. Ad valorem royalty taxes, severance taxes, and progressive income tax may induce the firm to extract at a slower rate in the current periods; whereas property taxes, profit taxes with cost or percentage depletion, and profit taxes with royalty expensing may induce the firm to extract at a faster rate in the current periods. The financial analysis reveals that the net-present values of the Canadian investment are higher than those of each of the other three countries: Nigeria, Indonesia, and Thailand. The Nigerian investment is shown to yield the least net-of-tax cashflows and net-present values.
- OSTI ID:
- 6310232
- Resource Relation:
- Other Information: Thesis (Ph. D.)
- Country of Publication:
- United States
- Language:
- English
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