Committee Meeting June 14, 2019 IADC Tax Committee Contracts - - PowerPoint PPT Presentation

▶

Sep 07, 2023 8 likes •59 views

IADC Contracts Committee Meeting June 14, 2019 IADC Tax Committee Contracts Committee dialog Background of the discussion: US Tax Reform TYPICAL CONTRACTUAL ARRANGEMENT OPTIONS Split/Tripartite agreement Rig Owner-Operator Standard BBC

SLIDE 1

IADC Contracts Committee Meeting

June 14, 2019

SLIDE 2

IADC Tax Committee – Contracts Committee dialog

Background of the discussion: US Tax Reform

SLIDE 3

Operator Rig Owner Third Party Customer Rig Owner/ Operator Third Party Customer Operator Rig Owner Third Party Customer Standard BBC arrangement Rig Owner-Operator Split/Tripartite agreement

TYPICAL CONTRACTUAL ARRANGEMENT OPTIONS

BBC Integrated Drilling Services Drilling Services BBC Integrated Drilling Services

SLIDE 4

Base Erosion and Anti-abuse Tax (BEAT): Illustration

Tax rate Scenario 1 Scenario 2 Scenario 3 Regular CIT due calculation Dayrate 150,000 300,000 450,000 Operating Costs (131,500) (131,500) (131,500) BBC expense (7,980) (157,980) (307,980) Margin/Regular taxable income * 10,520 10,520 10,520 Regular CIT due 21% 2,209 2,209 2,209 BEAT calculation Regular taxable income 10,520 10,520 10,520 Add back BBC expense 7,980 157,980 307,980 Add back Corporate management fees BEAT taxable income 18,500 168,500 318,500 BEAT due 10% 1,850 16,850 31,850 Impact of BEAT Additional cost (BEAT less CIT): Per day 14,641 29,641 Additional cost (BEAT less CIT): Per annum 5,343,892 10,818,892 * 8% Margin on Operating Cost

SLIDE 5