22 October 2015, News Wires – Ireland is to significantly increase the maximum rate of tax on oil and gas production in new draft plans revealed on Thursday.
The new petroleum production tax unveiled in the Finance Bill will see the maximum rate of tax levied on companies producing on Irish oil and gas fields in the future raised from 40% to 55%.
Local newspaper the Irish Times had reported earlier on Thursday that the measures were imminent as the Finance Bill announcement loomed.
Announcing the Bill, Minister for Finance Michael Noonan said the purpose of the measures “is to ensure that discoveries made under future exploration licenses will result in an increased financial return to the state and at an earlier point in time”.
The new tax legislation would replace the profit resource rent tax brought in under the 2008 Finance Act.
The news measures are:
• Once a field starts producing oil or gas, a minimum payment of 5% of annual gross revenues will be due annually;
• The ultimate rate of tax and amount due will be determined on a variable basis depending on the profitability of an individual field and will be payable in addition to the existing 25% rate of corporation tax that applies to the profits from oil and gas exploration;
• The operation of the petroleum production tax will result in an increase in the maximum marginal tax take on a producing field (combining corporation tax and petroleum production tax) from 40% to 55%.
The new rate will also be on top of the 25% corporation tax due from oil and gas companies’ profits from exploration.