Government kicks off talks on future of tax regime for oil and gas industry
20 May 2014 09:51 AM
Oil and Gas industry meet with Financial Secretary to discuss future tax
treatment.
Financial Secretary to the
Treasury Nicky Morgan will today (20 May 2014) meet the heads of the oil and
gas industry in Aberdeen for the first time since the Budget, when it was
announced that there would be a review into the tax treatment of the
industry.
This fiscal forum will outline
the scope and objectives of the review of the fiscal regime, which will look at
the longer term tax treatment of the industry, including field allowances and
how best to use the tax regime to incentivise investment. Heads of industry are
invited to set out their priorities for how the remaining resources can best be
exploited. The review will report its initial findings at the Autumn
Statement.
The fiscal review follows an
announcement at Budget 2104 of
the introduction of a new allowance for ultra high pressure, high temperature
projects. The allowance will reduce the tax rate on a portion of a
company’s profits from 62% to 30%. For every £1 billion spent,
companies will get at least £200 million in tax relief. This is already
expected to incentivise £6 billion of investment.
As part of the wider UK economy,
the industry can maximise the exploration of our oil and gas reserves. The
broad and diverse UK tax base means we are able to support the industry
through, for example, certainty over decommissioning tax relief. An independent
Scotland would have to invest around £3,800 per head – over ten
times more than when costs are spread across the UK - to match the £20
billion the UK government has committed towards decommissioning in the North
Sea.
Speaking before the fiscal
forum, Financial Secretary to the Treasury Nicky Morgan said:
The government is committed to
supporting investment in the oil and gas industry, a vital sector that provides
jobs and growth across the United Kingdom.
Today’s fiscal forum will
be a positive start to the review of the fiscal regime for oil and gas, and I
look forward to working with the sector on the long term future for the
industry.
While in Aberdeen, the Financial
Secretary will also visit the Glen Garioch distillery, to discuss the budget
announcement to freeze duties on spirits, and the Aberdeen harbour, to discuss
the impact of increased oil and gas investment on the harbour.
Photo by Cradlehall on Flickr,
used under Creative Commons.