UK Clamp Down on North Sea Drilling Tax Holiday

Posted by George Backwell
Tuesday, May 13, 2014
File image

A planned change in the way Britain taxes North Sea drillers exposes the loophole in a system that allowed an industry with annual revenues of 2 billion pounds to pay almost no corporation tax for two decades, prompting accusations that the UK tax authority is falling down on the job.

The change, announced by Finance Minister George Osborne in March, caps the amount a UK company can deduct from profit for leasing drilling rigs from an overseas unit in the same group. The rig-leasing units are typically based in countries where their income is taxed lightly or not at all.

A Reuters review of company accounts, shipping registers and other company statements, shows that such inter-company transactions - known as transfer pricing - have enabled drilling groups in the North Sea to operate almost tax free for 20 years or more, perfectly legally, and with the agreement of Britain's tax authority, Her Majesty's Revenue & Customs (HMRC).

Companies that have benefited from the current rules include Ensco Plc, Rowan Companies Plc and Transocean Ltd, which collectively accounted for over 60 percent of the UK market in 2012.

There is no suggestion of wrongdoing by any of these companies, which declined to comment.

Osborne's change, which will limit the amount companies can deduct from profit for such lease payments to 7.5 percent of the historical cost of the rig, will replace generous deductions calculated on the market value of rigs, which has been soaring.

The amount of money the government expects the tax change to raise is equivalent to around 5 percent of total rig market revenues, which would have raised an additional $600 million from Transocean, Ensco and Rowan alone over the last 10 years. ($1 = 0.5938 British Pounds)

(By Tom Bergin)

 


People & Company News

China Cosco Sinks into Red

Dragged by lackluster freight rates in the maritime transport market during the first half of 2016, China Cosco Holdings logged a 7.2 billion yuan ($1.07 billion) net loss for the January-June half,

DNV GL Backs John Laing on First Offshore Wind Investment

DNV GL successfully completed its due diligence work of the offshore wind farm “Nordergründe” in the North Sea, reviewing and quantifying the technical risks of the project.

MobileOps Pursuing Maritime Business

Redmond, Wash. based MobileOps, Inc., a software company specializing in the design and development of maritime software applications (dispatch, safety, compliance,

Finance

China Cosco Sinks into Red

Dragged by lackluster freight rates in the maritime transport market during the first half of 2016, China Cosco Holdings logged a 7.2 billion yuan ($1.07 billion) net loss for the January-June half,

India Shipping Ministry Enlarges Scope of Sagarmala

India's Ministry of Shipping has formulated a revised Central Sector Scheme to provide financial support to Major and Non-Major Ports as well as State Governments

Industry Wants Hanjin Shipping to Merge with Hyundai Merchant Marine

The Korea Shipowners’ Association (KSA) has officially suggested Hanjin Shipping merge with Hyundai Merchant Marine (HMM) to prevent  court receivership and liquidation, reports Business Korea.

Government Update

India Shipping Ministry Enlarges Scope of Sagarmala

India's Ministry of Shipping has formulated a revised Central Sector Scheme to provide financial support to Major and Non-Major Ports as well as State Governments

California: A Strong Shipbuilding State

Fifth in the nation for direct employment, California shipbuilding and repair industry supports nearly 35,000 jobs; Maritime Administrator highlights economic importance

White House Sees a Path to Approval of Pacific Trade Deal

The White House on Monday said it was hopeful it could win congressional approval of the Trans-Pacific Partnership trade pact before President Barack Obama leaves office,

Offshore Energy

DNV GL Backs John Laing on First Offshore Wind Investment

DNV GL successfully completed its due diligence work of the offshore wind farm “Nordergründe” in the North Sea, reviewing and quantifying the technical risks of the project.

GoM Operators Evacuating Ahead of Storm

Offshore oil and gas operators in the Gulf of Mexico are evacuating platforms and rigs in the path of Tropical Depression No. 9.   The Bureau of Safety and Environmental

BP, ExxonMobil, ConocoPhillips 'Quit' Alaska LNG Project

BP, Conoco Phillips, and Exxon Mobil said that the 65-billion dollar megaproject would be too unprofitable for them to move into the next phase of development.

 
 
Maritime Careers / Shipboard Positions Maritime Security Maritime Standards Naval Architecture Navigation Offshore Oil Pipelines Salvage Ship Repair Shipbuilding / Vessel Construction
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1199 sec (8 req/sec)