IRELAND SLATES PETROLEUM TAX LAW FOR 1992

Ireland plans to introduce detailed petroleum tax legislation in a bid to encourage development of offshore oil discoveries. Details of taxation proposals will be announced next year after preparatory work by the Irish Department of Energy, Department of Finance, and tax authorities. Irish Energy Minister Robert Molloy said the standard corporation tax of 40% will apply to profits from hydrocarbon production. In addition, ring fence provisions will be adjusted to allow losses and expenses from

May 13, 1991

2 min read

Ireland plans to introduce detailed petroleum tax legislation in a bid to encourage development of offshore oil discoveries.

Details of taxation proposals will be announced next year after preparatory work by the Irish Department of Energy, Department of Finance, and tax authorities.

Irish Energy Minister Robert Molloy said the standard corporation tax of 40% will apply to profits from hydrocarbon production.

In addition, ring fence provisions will be adjusted to allow losses and expenses from onshore mineral and mining activity to be offset against tax on hydrocarbon production.

WHY THE COMMITMENT

The commitment to introduce an offshore tax regime follows Ireland's decision to hold its first frontier licensing round in the Erris and Slyne trough areas in the Atlantic Ocean in mid-1993.

Ireland's only offshore development, Kinsale gas field, was put on stream in the 1970s by Marathon Oil Co. Ireland. Production will be supplemented the next few months with start-up of Ballycotton gas field, which Marathon is developing with a subsea production system tied back to Kinsale facilities.

In addition, local company Atlantic Resources plc is undertaking a feasibility study for a commercial oil development covering Helvick field in Celtic Sea Block 49/9.

A parliamentary bill laying out petroleum taxation was published in 1985, but no further action was taken, and it lapsed. Since then legislation has been suggested, but no proposals advanced.

Molloy added that continuing doubt about a tax regime had a negative effect on promotion of exploration off Ireland and placed the country at a disadvantage compared with countries with a clearly defined tax regime.