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Tax Exemption in relation to Late Life Asset Production Sharing Contract (PSC)

Late Life Asset Production Sharing Contract (PSC)

The Late Life Asset (LLA) PSC was adopted by Petronas in 2019 for specific oil and gas fields nearing the end of their productive life with resources of less than 30 MMstb.


These PSCs have better terms for Contractors, intending to extend the value of the fields until abandonment.


The first two LLA fields (the Tembungo and the MASA Cluster) were offered in the 2020 Malaysian Bidding Round.


Proposed Incentives for Late-Life Assets (LLA) Projects

In Budget 2022, some measures have been suggested to persuade oil and gas investors to participate in LLA projects. To read more:

Petroleum (Income Tax) (Exemption) Order 2022

IN exercise of the powers conferred by subsection 65C(1) of the Petroleum (Income Tax) Act 1967 [Act 543], the Minister makes the Petroleum (Income Tax) (Exemption) Order 2022, which was gazetted on September 27, 2022.


This Order is deemed to have come into operation on 1 January 2020.

162.1 Petroleum (Income Tax) (Exemption) Order 2022 - P.U A 302
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Tax Exemption

The Minister may determine a project as a Late-Life Assets project which is a brownfield oil or gas field [an oil or gas field that has been developed and has reached a peak level of oil or gas production rate] and has an economic lifespan not exceeding ten years commencing from the year a Late-Life Assets production sharing contract is signed.

Under this Order:

  • Petroleum Income Tax Exemption in respect of statutory income derived from petroleum operations concerning Late-Life Assets production sharing contract is granted, provided

  • a Late-Life Assets production sharing contract with Petroliam Nasional Berhad ("PETRONAS") has been signed from 1 January 2020 to 31 December 2029.

  • The Statutory Income shall be determined per the formula provided in the Order.


In determining the Chargeable Income referred to in the formula, the statutory income shall be ascertained in accordance with Chapter 4 of Part III of the Act and by having regard to the Petroleum (Income Tax) (Accelerated Capital Allowances) (Late-Life Assets Production Sharing Contract) Rules 2022 [P.U. (A) 301/2022]

Non-application

These Rules shall not apply to a chargeable person in the basis period for a year of assessment where the chargeable person—


  • has been granted accelerated capital allowance under the Petroleum (Income Tax)(Accelerated Capital Allowances) (Marginal Field) Rules 2013 [P.U. (A) 119/2013];

  • has been granted an investment allowance under the Petroleum (Income Tax) (Investment Allowance) Regulations 2013 [P.U.(A) 120/2013];

  • has been granted tax exemption under the Petroleum (Income Tax) (Exemption) Order 2013 [P.U. (A) 122/2013];




  • has been granted accelerated capital allowance under the Petroleum (Income Tax) (Accelerated Capital Allowances) (PETRONAS Marginal Field) Rules 2014 [P.U. (A) 304/2014];

  • has been granted tax exemption under the Petroleum (Income Tax) (Exemption) Order 2014 [P.U. (A) 305/2014];

  • has been granted an investment allowance under the Petroleum (Income Tax) (Investment Allowance for PETRONAS) Regulations 2021 [P.U.(A) 336/2021];

  • carries on petroleum operations in the Joint Development Area; or


  • carries on petroleum operations in an area under any agreement or arrangement made by the Government with any government of any territory outside Malaysia for the joint exploration and exploitation of petroleum in overlapping areas.


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