The UK’s official industry body Oil & Gas UK has made demands for changes to be made to the current North Sea tax regime in order to better protect companies from the falling oil prices.
It is obvious that the oil and gas industry has recently been suffering in the face of the current climate, Oil & Gas UK’s economics and commercial director Mike Tholen said “the falling oil price is affecting activity across the UK North Sea and companies are having to take hard decisions in light of this challenging business environment… To sustain the economic benefits the industry has provided for many decades, Oil & Gas UK believes that urgent action is needed to deliver the programme of fiscal change by the 2015 Budget and we are committed to working closely with HM Treasury to do so.”
These demands have been reiterated by offshore trade union RMT who have also called for urgent tax reform. RMT have issued extreme warning that unless innovative tax incentives are issued that the oil slump we are currently facing could stand to destroy UK infrastructure and the ability to exploit remaining reserves- exacerbating the oil situation further.
At the start of this month the government issued reductions of the tax rate for companies investing in the UK Continental Shelf, however consultations will begin again next year to consider how best to encourage this investment further. Talks will soon commence between the government and the Oil and Gas Authority on how best to use the tax system to support exploration and address the current oil dilemma.
It is hoped that once the government amend the current tax laws that some stability can be adopted back into the oil and gas industry and UK companies can again start to rebuild their faith in the New Year.
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