OEUK proposes that Britain change its oil and gas tax regime from 2027
British industry association Offshore Energies UK (OEUK) has called for a new tax regime for the oil and gas sector to be introduced from January 2027, rather than after 2030. The organization estimates that this could bring an additional £14.9 billion to the UK budget over the next decade.
As OilPrice reports, OEUK presented its calculations in its annual Economic Report. The association proposes the early introduction of the Oil and Gas Revenue Levy, a mechanism intended to replace the current Energy Profits Levy.
Terms of the new levy
The proposed Oil and Gas Revenue Levy provides for a 35% rate on revenues provided that the oil price exceeds $90 per barrel and the gas price exceeds 90 pence per therm. This levy would apply in addition to the 30% profit tax under the special regime and a 10% supplementary charge.
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It is currently planned that the new mechanism will replace the Energy Profits Levy after 2030. At the same time, OEUK believes that its early introduction in 2027 would ease the tax burden on operators and help restore investment confidence in the UK North Sea sector.
Revenue estimate
According to OEUK's calculations, early implementation of the regime would generate £2.4 billion more in receipts from corporation tax, the Energy Profits Levy, Petroleum Revenue Tax and the Oil and Gas Revenue Levy than under the current schedule. A further £12.6 billion, according to the association's estimate, could come through additional payroll taxes.
OEUK chief executive David Whitehouse said that the Energy Profits Levy continues to deter investment in the UK continental shelf. He also noted that appropriate budget decisions could attract private investment, support employment, strengthen energy security and increase tax revenues.
