In this chapter, Matthew Genasci discusses contract-based systems, including both production sharing arrangements and service contracts, in comparison to royalty tax systems. He explains service contacts, which in essence involve a fee-for-service type arrangement. He discusses how the impact of progressivity or regressivity of a fiscal regime on the government and the investor and the effect of the large up-front capital expenditure, required for most extractive projects, on fiscal regime design. Finally, he examines how all of these fiscal tools fit together and looks at progressive tax instruments.
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