Encyclopedia of Mineral and Energy Policy
From a practical perspective, any fiscal system used in the world falls into either of the two major categories: concessions (also widely known as a royalty + taxes or R + T) and contracts (also referred to as production sharing agreements or PSA).
Each system has multiple types and variations, and some of them use their own specific terminology as a result of certain conceptual, historical, and geographic variances. However, the difference in concepts boils down merely to a difference in the choice of words to describe very similar economic processes. Their most significant differences could be tracked in the legal sphere because the acquisition of ownership right by mineral producers to their mineral production is a highly indicative factor. However, from the economic perspective, specifically, in terms of cash flow generation associated with each individual system, those differences appear noncritical. Below follows a flowchart of basic equations in a typical R + T tax system. ...