PBR05: North Sea oil groups now paying 50% tax
Oil groups operating in the North Sea will now be paying corporation tax of 50% on profits after supplementary tax increase
Chancellor Gordon Brown today raised the supplementary tax levied on North
Sea oil groups by 10%, meaning that these companies are now effectively paying
corporation tax of 50%.
It is estimated that the change will raise £2bn in the 2006/2007 financial
year, £2.2bn the following year and £2.3bn in the year after that. The increase
follows a similar 10% rise introduced by Brown in 2002.
In his PBR address Brown said returns in the North Sea were now nearly 40%,
as opposed to ‘ordinary’ returns of 13%.
‘With the tax on new development in the North Sea now lower than in the USA
and the Gulf of Mexico, Norway, Italy and Australia, and in order to strike the
right balance between producers and consumers, I will raise the supplementary
North Sea charge by from 10% to 20%,’ the chancellor said.
Chris Sanger, Ernst & Young partner, however, said the tax rise would be
the last the sector would have to endure during the current period of
government.
‘The chancellor made a commitment that there would be no further tax
increases on the sector during this parliament,’ said Sanger.