The tax stabilisation clause

Any oil production requires access to the potentially oil-bearing subsoil from players willing to invest the funds needed to discover or develop hydrocarbon resources. There are therefore two possible solutions. Either the player that controls access to the subsoil commits itself to the industrial activity of exploration and production; or it enters into a contract with another player, which can only be an oil company. The fiscal stabilisation clause in oil contracts undermines the interests of the State and neutralises State sovereignty. The purpose of this clause is to guarantee investors that their investments will not be subject to any changes, which remains an advantage for them and not for the host country, as it has a negative impact on the national economy. The more tax stabilisation clauses there are, the less tax they pay. This clause is inversely proportional to the amount of tax paid. It affects the most important elements: tax, royalties, levies and the major charge. These are the core elements of taxation.