Association urges North Sea tax cuts ahead of UK budget
Oil & Gas UK has issued a plea to Britain’s Chancellor George Osborne for further tax relief on UK North Sea oil and gas production.
Two days prior to Osborne’s annual budget statement, the association has asked for a double-digit reduction in the Supplementary Corporation Tax charge, plus a single simplified Investment Allowance.
Oil & Gas CEO Malcolm Webb said: “Last year, after taxation, this industry suffered a negative cash flow of £5.8 billion [$8.58 billion].
“TheUK North Sea sector is paying the price for having become a high cost, high tax, and poorly regulated region. We urgently need to improve our cost base, reduce the tax burden, and improve the stewardship of the basin.”
The industry is striving to improve its cost efficiency, with wide-ranging programs under way throughout the sector, Webb said.
“However, significant investment is also required alongside action on costs and regulation. A clear signal must be sent out that the UK tax regime has been restructured in order to attract and sustain much needed investment for the long term.”
Unsanctioned projects currently competing for investment on the UK continental shelf total £25 billion ($36.97 billion), he added. “If industry works on its cost base, and the Chancellor delivers a more competitive tax regime, some £4-5 billion [$5.9-7.4 billion] of these projects could be sanctioned in the near term.”