PETROLEUM PRODUCTION PROFITS
(DETERMINATION OF TOTAL INCOME) ġ S.L.123.13 1
SUBSIDIARY LEGISLATION 123.13
PETROLEUM PRODUCTION PROFITS 
(DETERMINATION OF TOTAL INCOME) RULES
1st January, 1982
 LEGAL NOTICE 19 of 1982, as amended by Legal Notice 48 of 1991.
Title.
(Determination of Total Income) Rules.
Total income from 
certain petroleum 
production 
operations.
Cap. 123.
2. When a person derives gains or profits from sources
mentioned in paragraph (ii) of the proviso to article 14(1) of the
Income Tax Act then so far as concerns the gains and profits
derived by that person under a petroleum production sharing
contract, the total income shall be ascertained in the manner
provided for in these Rules.
Computation of 
total income and 
valuation of 
petroleum.
3. The total income of a person deriving gains or profits as is
mentioned in rule 2 shall be equivalent to the value of the
petroleum to which, in accordance with the contract under which
the operations are carried out, such person is entitled as his share of
that quantity of petroleum remaining after deducting from the net
production of petroleum the cost recovery petroleum, such value
being also determined in accordance with the said contract:
Provided that where the value of the cost recovery
petroleum for any calendar year exceeds the actual costs
recoverable during that calendar year including any recoverable
costs carried forward the total income ascertained as aforesaid shall
be further increased by an amount equivalent to the value of the
share of such excess cost recovery petroleum to which such person
is entitled under the contract.
Total income from 
certain contracts.
Substituted by: 
L.N. 48 of 1991.
4. Notwithstanding the provisions of rule 3, the gains or
profits derived by a person for any calendar year from a petroleum
production sharing contract entered into on or after the first day of
January, 1991, shall be ascertained by deducting from the total of
the cost recovery petroleum and the share of profit petroleum
accruing to such person for that year under the said contract, the
recoverable costs as determined under the contract, the recoverable
costs as determined under the contract, and not yet fully recovered
by the said person. Where after such deduction there remains any
balance of unabsorbed recoverable costs, the amount of such
unabsorbed costs shall be carried forward to the following year and
shall be added to, and become part of the recoverable costs for that
year. This procedure shall be carried on in subsequent years.
Separate sources of 
income.
Added by:
L.N. 48 of 1991.
5. For the purpose of these Rules, each petroleum production
sharing contract shall be deemed to be a separate and distinct
source of income and any person deriving gains or profits from
more than one such contract shall be subjected to tax as if he were a
separate person with respect to each such contract. Where more
than one commercial petroleum field is discovered in a contract
area in respect of which a petroleum production sharing contract is
2 ġ S.L.123.13
PETROLEUM PRODUCTION PROFITS
(DETERMINATION OF TOTAL INCOME)
entered into by any person on or after the first day of January,
1991, the gains or profits from each such field shall be subject to
tax as if each field constitutes a separate and distinct source of
income arising to a separate person, so however that the said person
shall have the right of identifying the field or fields in the said area
where the cost of exploration operations are to be taken into
account in ascertaining the relative gains or profits.
