UK Trade Association Seeks Double-Digit Reduction in Supplementary Corporation Tax

The trade association Oil & Gas UK asked for a double-digit reduction in the Supplementary Corporation Tax charge and a simplification of the tax incentive offered to oil and gas companies to trigger capital investment in the United Kingdom. 

“Last year, after taxation, this industry suffered a negative cash flow of £5.8 billion. The UK North Sea sector is paying the price for having become a high cost, high tax and poorly regulated region” Malcolm Webb, Oil & Gas UK chief executive, said on Monday. 

According to the British trade association, a reduction in taxes and a simplification of the Investment Allowance would bring along investment for £4-5 billion. 

‘Unsanctioned projects currently competing for investment on the UK Continental Shelf (UKCS) total £25bn. If industry works on its cost base, and the Chancellor delivers a more competitive tax regime, some £4-5bn of these projects could be sanctioned in the near term’ reads the note published on the trade association’s website.

Webb said he is confident that the Chancellor will intervene on Wednesday, announcing measures in line with the trade association’s requests. 

Earlier this year, Oil & Gas UK intervened in the shale gas debate, saying that onshore unconventional resources would not make a major contribution to the country’s energy mix for eight to ten years. On that occasion, he said that this limited contribution in the short term should not lead the Government to ban fracking.