Local players welcome the tax changes
THE Australian government’s proposal to switch all offshore and onshore oil and gas projects to Petroleum Resource Rent Tax could leave many local liquefied natural gas (LNG) players worse off, the Australian Petroleum Production and Exploration Association (APPEA) said last Friday.
However the changes have been welcomed by local players such as Santos and Origin Energy, which are planning world coal seam gas-based LNG projects here in Gladstone.
They said the announcement places them on the same footing as offshore LNG projects in Western Australia and removed the uncertainty surrounding the proposed tax changes
“We’re quite happy to live under the new regime of PRRT,” Origin chief executive David Knox told The Observer last week.
“We could also have stayed in the old regime prior to the super profits tax. It was the super profits tax itself that we could not live with.”
Under the proposed changes, Australia’s existing PRRT, previously only levied on offshore developments, would be applied to all onshore and offshore oil and gas projects, including the LNG industry.
The PRRT is a profits tax levied at 40% after investment has been recouped, and paid in addition to company tax, which is now set to be cut to 29% from 30%, rather than the 28% proposed as part of the RSPT package.
APPEA Chief Executive Belinda Robinson said in a statement that Australia’s oil and gas sector encompasses a diverse range of companies many of whom will be struggling to see how this reform will not lead to them being worse off.