Treasurer Jim Chalmers is close to lifting taxes on gas producer profits after declaring the petroleum resource rent tax is failing to deliver sufficient revenue.
Most LNG projects will never pay PRRT
But under the current tax rules, energy industry analysts say if the long-term oil price reverts to $US60 to $US70 a barrel, most liquified naturalThe Treasury review of the PRRT began under former Liberal treasurers Scott Morrison and Josh Frydenberg, but some outstanding issues were shelved during the COVID-19 disruption.
”Other areas of focus could include deductibility of costs, transferability/ pooling of costs, uplift rates as costs are carried forward and cash refundsEnergy companies typically pay the corporate tax rate of up to 30 per cent on profits before paying any PRRT, but many oil and gas companies pay no or limited PRRT due to tax write-offs for huge capital expenditure.The combined total tax rate of company tax and PRRT is theoretically up to 58 per cent, allowing for deductions.
The undervaluation reduces the PRRT paid by integrated projects and Mr Callaghan called for it to be overhauled in line with international best practice set by the Organisation for Economic Co-operation and Development. Woodside chief executive Meg O’Neill is due to speak at the National Press Club in Canberra on Wednesday.
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