Ernst & Young warns of oil tax hike
Dominant auditor in the oil and gas sector warns that tax increases on oil groups is 'inevitable'
Big Four firm Ernst & Young, has warned that the a rise in government
taxes on oil and gas groups this autumn is ‘almost inevitable’.
E&Y partner Chris Sanger, a former Treasury tax adviser, and Derek Leith,
the firm’s head of oil taxation, said oil companies were ‘one of the most
obvious targets for tax increases and fiscal changes’ as chancellor Gordon Brown
looked to fill his £11bn budgetary black hole.
Reacting to the likelihood of a tax hike, analysts at investment bank Merrill
Lynch have advised clients to avoid production and exploration companies exposed
to the UK, while Royal Dutch Shell CFO Peter Voser has warned that increased
taxes would harm investment in the UK.
In an interview in the Financial Times, Leith said previous tax
hikes had caused ‘a very pronounced suspension of exploration activity’ and
called for a predictable tax system that took oil price declines as well as
rises into account.
E&Y’s audit clients are responsible for the production of more than half
of the North Sea’s oil and gas