Tullow Oil reduces effective tax rate

Tullow Oil reduces effective tax rate

Production sharing agreements help to reduce oil company's tax rate.

Tullow Oil has reduced its effective tax charge from 35.5% of profits in 2003, to 33% in 2004 because of a production sharing agreement held by one of its recent acquisitions.

Tullow acquired Energy Africa for £311m in May 2004. Energy Africa, instead of paying tax, shared a portion of production with the host government where it was based, and as a result Tullow’s effective tax rate was reduced.

Tullow’s turnover for 2004 increased by 74% to £225.3m.

 

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