Poland: New Draft Tax Bill for Hydrocarbons Expected in Coming Days
Poland is set to reveal a more detailed version of new hydrocarbons regulations in the coming days, according to the Minister of Environment Marcin Korolec, who has not excluded a slight liberalization of taxation levels and also promises to loosen environmental requirements.
Marcin Korolec, speaking at The Economy and Public Administration conference in Silesia, Southern Poland, notified that the ministry has almost finished preparing records of the draft.
According to the minister, publication will be followed by public consultations and the Ministry of Finance will take up the burden of a further work on details of new regulations.
The minister also said that in this case the legislation process is exceptionally laborious, as at least nine bills must be amended before new regulations can be entered into force.
Taxes under 40 percent?
Questioned by Reuters about final taxation levels, Marcin Korolec responded it would not vary much from what had been approved by the government in October.
“It will definitely not exceed the 40 percent of the sector's gross profits. It might turn out to be slightly lower" – Marcin Korolec declared.
The general assumptions of new regulations, presented in October, were immediately criticized by the industry organization. In the last weeks of 2012 the government suggested that there was some room for compromise.
Minister Korolec’s declaration, quoted by Reuters, echoes a statement made in late November by one of the authors of the project, Piotr Wozniak.
Wozniak, National Geologist and deputy Environment Minister, spoke at an industry conference in Warsaw where he underlined that the overall levy would not exceed 40 percent and added:
“There's a 40 percent cap on the government take, which cannot be higher. We would like to have the most competitive and most attractive system in Europe as we very much want to have investors."
Environmental regulations simplified?
Interviewed by the Polish Radio Program, Marcin Korolec also signaled that new regulations would liberalize certain environmental requirements.
The minister assured that changes would abolish existing absurdities and not jeopardize environment protection standards in the country.
Representatives of companies exploring for shale gas in Poland often complain about complicated environmental regulations. Lawyers working for the industry agree that the labyrinth of regulations is exceptionally entangled.
Laborious process
The turbulent process of creating a new regulatory framework for hydrocarbons production in Poland have been under way for over a year.
The first attempt on June 13th was unsuccessful as the Ministry cancelled a news conference without explanation where it was to present the much awaited draft regulations.
The proposed bill was finally presented and approved in October.
The assumptions include a 5 percent tax on gas extraction, 10 percent tax on crude oil extraction, 25 percent tax on “accumulated cash flow” or income after expenses for oil and gas producing companies, plus an exploration tax of 20-24 PLN per 1000 cubic meters in addition to 19 percent CIT and property taxes.
As reported on December 10th, the government schedule for 2013 envisaged that ministries of Environment and Finance would be writing up wording of new hydrocarbon law in the first quarter of this year.