Osborne’s Budget Announcements Include Overhaul of North Sea Oil & Gas Tax Regime
March 16, 2016
UK chancellor George Osborne has announced a significant overhaul of the tax regime relating to the North Sea oil and gas industry.
During his Budget speech to the House of Commons, Osborne said that Petroleum Revenue Tax (PRT), which was cut last year from 50 per cent to 35 per cent, will now be “effectively abolished”.
In addition, the supplementary charge for oil companies operating in the North Sea is to be cut from 20 per cent to 10 per cent, with the introduction of that change effectively being backdated to January 1st 2016.
“The oil and gas sector employs hundreds of thousands of people in Scotland and around our country,” Mr Osborne said in his speech.
“In my budget a year ago I made major reductions in taxes, but the oil price has continued to fall so we need to act now for the long term.
“I am today cutting in half the supplementary charge on oil and gas from 20 per cent to 10 per cent and I am effectively abolishing Petroleum Revenue Tax too – backing this key Scottish industry and supporting jobs right across Britain.”
There have been repeated calls from prominent Scottish politicians and representatives of energy sector trade bodies for the chancellor to take action in support of Scotland’s oil and gas sector.
Jobs have been lost on a very significant scale in recent quarters in the industry and numerous operators with interests in the North Sea oil and gas sector have been forced into administration after a sharp decline in energy prices.
The trade body Oil & Gas UK recently revealed that less than £1 billion is expected to be spent on new projects in the North Sea by energy sector operators this year, which is well down on the average spend of almost £8 billion in the first five years of the decade.
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