The energy profits tax will target profits made from a spike in oil and gas prices, as demand for energy increases after the end of pandemic shutdowns and the start of the Russia-Ukraine conflict.
The tax bill has yet to pass through the upper legislative chamber known as the House of Lords to become law. The Lords may seek to amend a bill, but very rarely attempt to block legislation altogether.
The tax was first announced by the Conservative government on May 26 and was met with criticism from oil and gas companies that it would reduce investment and domestic production.
The government says an investment incentive, which means businesses could receive a tax break of 91 pence for every pound ($1.19) spent on new oil and gas extraction, would support energy security.
In response to a consultation, the government amended the bill to include a firm end date of 2025 and to allow companies to deduct from tax the cost of decommissioning old fields and investing in field electrification. in production.
Climate activists and opposition politicians have criticized the bill’s incentive mechanism for failing to provide tax benefits for renewable energy projects.
Mike Tholen, director of sustainability at the oil and gas industry association Offshore Energy UK, said the industry is still concerned about the impact of the tax on energy supply, but acknowledges that the government has cost the concerns.
“We now ask them to continue to actively engage with the sector as the tax unfolds, and to consider our other recommendations,” Tholen said in an emailed statement.
($1 = 0.8400 pounds)
Britain’s largest oil and gas producers:
UK government revenue
eu from oil and gas sector UK government revenue from the oil and gas sector:
