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Oil & gas producers facing A$16bn tax bill - Appea

Image shows an LNG tanker

Photo by Bloomberg

21st April 2023

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – Taxes from the Australian oil and gas industry are set to reach A$16.26-billion during 2022-23, up from A$6.46-billion last financial year the Australian Petroleum Production & Exploration Association (Appea) said on Friday.

The total includes corporate income tax, the Petroleum Resource Rent Tax (PRRT), state royalties and excise for companies operating with December 2022 or June 2023 financial years.

“The oil and gas industry is delivering substantially bigger returns for Australians and this A$16-billion will help governments funds policies like disability support and paid parental leave as well as important infrastructure like roads, schools and hospitals,” Appea CEO Samantha McCulloch said.

“Gas companies are among the biggest taxpayers in Australia yet face compounding regulatory interventions that risk energy security, investment and future revenue streams to governments.”

“The PRRT is delivering growing returns to taxpayers alongside other payments the industry makes in royalties, corporate income tax and other fees. But it’s important to remember direct payments are only one part of the industry’s broad economic contribution, enabling almost A$500-billion economic activity annually, supporting 80 000 jobs, providing essential energy to millions of homes and businesses, including major sectors like manufacturing and transport, and facilitating economic growth,” McCulloch said.

“For example, Appea’s Financial Survey has found the industry’s estimated direct spending on Australian goods and services would grow to A$45-billion this financial year, up from A$29.9-billion previously.”

McCulloch said that Appea members who export alongside producing domestic supply are forecast to contribute over A$15-billion to governments this financial year, up from A$5.67-billion in the previous financial year.

 “Our industry invested over A$300 billion in liquefied natural gas (LNG) projects between 2010 and 2020 and the return on that investment is clear to see.

“With changing economic conditions, including higher than forecasted prices, the taxation profile of the LNG industry is changing and the sector is on a faster path to make up the losses accumulated during construction, bringing forward timeframes for tax payments.

“This further shows how the tax system, with long-term settings encouraging investment in major multibillion dollar, high-risk nation-building projects, is working, stimulating investment, job creation and delivering for Australians.”

Appea’s financial modelling comes as the federal government considers a review of the PRRT, with Treasurer Jim Chalmers saying the advice contained within the report was the culmination of work done over the life of two governments, as well as substantial consultation and engagement over a long period of time.

The PRRT is a tax generally on profits generated from the sale of marketable petroleum commodities, and since 2019 onshore petroleum projects have been removed from the scope of the tax.

Edited by Creamer Media Reporter

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