Tax rise leaves UK companies reeling

Offshore staff

Britain's offshore industry has reacted angrily to the UK Chancellor's decision to impose a new surcharge on corporation tax paid by oil and gas producers. This will raise the rate at which they pay the tax on certain fields to 50%, the aim being to raise a further £6.5 bn in revenue for the UK Treasury over the next three years.
The UK Offshore Operators' Chief Executive, Malcolm Webb, commented: "It is almost beyond comprehension that the Government has failed to grasp the vulnerability of the industry's future in the UK. His move could not come at a worse time. North Sea activity has recovered remarkably since 2002 when it was last hit by a punitive tax charge."
Webb added that the new surcharge would deter investment in new UK fields and make older fields less attractive for increased recovery. "Moreover, the impact will be felt significantly by smaller oil and gas producers. Loss of investment will lead directly to the permanent loss of reserves and a swifter onset of decommissioning."
Geoff Runcie, Chief Executive of the Aberdeen and Grampian Chamber of Commerce, said: "All the talk of long-term security of supply and attracting fresh new talent into the industry, together with the many initiatives relating to fallow fields and stewardship, are thrown in the bin by another punitive tax hike. No other major industrial sector has attracted the attentions of the Chancellor the way the oil and gas industry has."

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