MELBOURNE, Nov 30 (Reuters) – Australia is targeting the oil and gas industry for a tax review ahead of next year’s budget, in a push to boost revenue after a sharp slump over the past three years and collect more from multinational giants.
Treasurer Scott Morrison said on Wednesday that takings from the nation’s petroleum resource rent tax had halved to A$800 million ($600 million) since 2013, while revenue from crude oil excise taxes had more than halved due to a collapse in oil and gas prices and falling output.
“This is about ensuring sustainability and effectiveness and efficiency of our tax system. It is actually not primarily about revenue. It is important these companies pay their fair share when it comes to these issues,” Morrison told reporters.
The drive comes as Australia is not expected to reap as much as hoped from a more than $200 billion investment spree over the past few years that will make it the world’s biggest exporter of liquefied natural gas (LNG) by around 2019.
That is because the petroleum resource rent tax (PRRT) is designed to collect revenue after projects have recouped their investment and are profitable, which will take longer than expected in a world of weak oil and gas prices.
“LNG projects, unlike conventional oil and gas projects, involve billions of dollars of up-front investment. It will take 10 or more years to recover that investment before making a return,” Shell Australia Chairman Andrew Smith said in an emailed statement.
Canberra has already been tackling multinationals over clever accounting and the use of trading operations offshore to lower their tax exposure in Australia, and Morrison said the oil and gas focus is part of that effort.
Australia last targeted the resources industry in 2010, when then Labor Prime Minister Kevin Rudd proposed a super profits tax at the height of the mining boom which was eventually heavily watered down after a bitter fight with miners and contributed to his downfall.
The oil and gas tax review follows a recent audit, which found that Australia’s biggest petroleum operation, the North West Shelf joint venture, whose owners include Chevron Corp and Royal Dutch Shell, may have underpaid royalties by taking ineligible deductions.
Morrison said deduction calculations will be examined as part of the review.
INDUSTRY BACKS REVIEW
The oil and gas industry said it would cooperate with the review, in contrast with the mining industry in 2010, saying the petroleum resource rent tax was working as intended.
ExxonMobil said it had paid over A$12 billion in PRRT since 1990.
“We welcome the review. This will give us another opportunity to talk about our contribution,” ExxonMobil Australia Chairman Richard Owen said at an event in Sydney.
The Australian Petroleum Production and Exploration Association said the industry had paid more than A$5 billion in taxes in 2015, despite recording its first ever net loss.
“The continued payment of taxes at a time when the industry is under severe pressure debunks critics’ suggestions that the industry is not somehow paying its way,” APPEA Chief Executive Malcolm Roberts said in a statement.
Oil and gas company shares fell on Wednesday along with oil prices, as OPEC looked like it would fail to agree on a production cut. Woodside fell 2 percent, Santos dropped 3.5 percent, while Beach Energy slid 4.8 percent.
(Reporting by Sonali Paul; Editing by Richard Pullin)
source: http://www.rigzone.com/news/oil_gas/a/147603/Australia_Takes_Aim_At_Oil_And_Gas_Industry_In_Tax_Review/?pgNum=1
