The chief executive of Oil and Gas UK said the industry is still a “major tax contributor” after a report claimed some operators had links to tax havens.
Industry body boss Deirdre Michie said several billion pounds a year was being paid by the supply chain in coporation tax and payroll taxes.
It comes after the report from the International Transport Workers’ Federation (ITWF) said companies such as Chevron were using “aggressive tax minimisation” while also alleging the firm had $32billion in offshore accounts and hundreds of offshore subsidiaries.
Chevron has said the claims are “incorrect”.
Michie said:“The profitability of the UK offshore oil and gas industry has been severely hit by the collapse in the oil price over the past 18 months. Despite making significant cost reductions, nearly half (43 per cent) of oil fields in the UK Continental Shelf are likely to be operating at a loss at the current oil price.
“Profits have been squeezed to record lows yet in spite of this, the UK offshore oil and gas industry is still a major tax contributor. Several billion pounds a year are paid by the supply chain in corporation tax and payroll taxes. Over the last forty years, industry has paid more than £330 billion in total (2014 money) from taxes on UK oil and gas production alone to the UK government.
“It is important to note that all profits from oil and gas production activity in the UK are protected by a ‘ringfence’ which stops these from being diverted overseas. This guarantees all oil and gas companies operating in the UK pay the full tax due to HMRC and ensures losses from a company’s other activities (including from overseas operations) are not used to reduce a company’s UK production tax bill.”
“The UK oil and gas industry does not, and has never, received subsidy. Even with the reductions in taxation announced in Budget 2016, the industry still pays a much higher rate than any other industry. Ring fence profits are charged at a 30% corporation tax, plus a 10% Supplementary Charge, which compares against a 20% corporation tax paid by all other business in the UK.
“The lowering of the tax rate earlier this year is in direct response to the sharp downturn our industry has been facing for over two years. This move by the Government supports efforts made by the sector to improve efficiencies and protect jobs.
“It is also a signal to international investors that the UK Continental Shelf is open for business, attracting investment, promoting activity and thereby generating additional tax revenues over the long-term.”
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