16 Mar UK Chancellor announces tax reduction for Oil & Gas sector
UK Chancellor George Osbourne announced in his Budget statement that Petroleum Revenue Tax (PRT) would be “effectively abolished”, with cuts from last year of 50 per cent to 35 per cent.
This decision comes in response to difficulties in the North Sea’s offshore industry and the strain on the UK’s oil and gas sector.
In addition, oil companies’ existing supplementary charge will be cut from 20 per cent to 10 per cent.
In the statement, the Chancellor said because of the fall in oil price, acting long-term is necessary.
“I am today cutting in half the supplementary charge on oil and gas from 20% to 10% and I am effectively abolishing Petroleum Revenue Tax too – backing this key Scottish industry and supporting jobs right across Britain,” he said.
Richard Cockburn, Energy Partner at Bond Dickinson said the tax reductions will significantly help to improve the North Sea projects economically.
“The reduction of the supplementary charge may allow operators to take a second look at projects which, until now, were looking uneconomic,” Cockburn said. “Oil and Gas UK has been predicting investment approvals of less than £1billion this year relative to a typical annual figure of £8 billion over the last five years so the Chancellor’s reform has come at an opportune time.”