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  • Definitions

    The following terms are used specifically in relation to the petroleum resource rent tax (PRRT) gap. Further definitions that relate to our broader tax gap program are in Principles and approaches to measuring gaps.

    Bottom-up approaches

    Bottom-up approaches involve a detailed examination of data sources. These include tax returns, audit results, risk registers or third-party data-matching information. We then extrapolate the results to establish the extent of non-compliance across the whole population. From this we estimate the tax gap. This approach generally involves applying statistical techniques to estimate the incidence and value of non-compliance. A bottom-up approach is typically used for direct taxes.

    Channel analysis

    A channel analysis approach is an examination of data (volumes or taxable value of a commodity) from various sources, to determine the extent of non-compliance across the whole population. The data sources can include check-point seizures (such as through customs) or property raids. It can also include operational data and insights from relevant experts.

    Micro-analytical techniques

    Methods that use micro-analytical techniques generally involve disaggregating the total population data, before applying the method on a line-by-line basis to individual tax records. This includes applying techniques to estimate the unreported tax and impact of non-detection for each individual tax record. The final data is then re-aggregated to determine the final results for the total population.

    Petroleum resource rent tax (PRRT)

    The petroleum resource rent tax (PRRT) is a tax on profits generated generally from the sale of oil and gas products, known as marketable petroleum commodities (MPCs). The PRRT taxes profits above a specified rate of return, and is assessed on a project-by-project basis. This means an entity calculates its PRRT liability separately for each project interest it holds.

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      Last modified: 17 Oct 2019QC 57597