Tommy Broughan (Dublin North East, Independent)
Link to this: Individually | In context | Oireachtas source

81. To ask the Minister for Communications, Energy and Natural Resources if his Department has made any submission to the Department of Finance in relation to changes to the taxation regime for exploration in Ireland's territorial waters and maritime economic zone, in order to maximise the tax and fiscal yield for the Irish people; and if he will make a statement on the matter. [38990/15]

Joe McHugh (Donegal North East, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Following on the July 2013 Dáil Éireann debate on the 2012 Report of the Joint Oireachtas Committee on Communications, Natural Resources and Agriculture on Offshore Oil and Gas Exploration, sectoral experts Wood Mackenzie were engaged to advise on the appropriateness of Ireland's oil and gas fiscal terms.

In undertaking their review Wood Mackenzie sought to take account of the need to strike the necessary balance between attracting the high-risk exploration investment necessary to prove the potential of the Irish Offshore and maximising the return to the State from Ireland’s natural resources. Wood Mackenzie furnished their Final Report to my Department in May 2014.

Government approval was received in June 2014 to publish the Final Report and to revise Ireland’s oil and gas fiscal terms along the lines recommended by Wood Mackenzie.

Subsequently, a Steering Group comprising representation from the Department of Finance, my Department and the Revenue Commissioners, was tasked with preparing legislative proposals to give effect to the revised terms. The work of this Group has concluded and the resulting legislative proposals, which fully implement the Wood Mackenzie recommendations, are contained in Finance Bill 2015.

Section 18 of the Bill amends the Taxes Consolidation Act 1997 to insert a Chapter introducing the new field based Petroleum Production Tax which will apply in the case of any petroleum authorisation first awarded after 18 June 2014. The new regime will result in a minimum tax payment at a rate of 5% of gross revenues in every year that a field is selling production and an increase in the maximum marginal tax take on a producing field from 40% to 55%.

For future prospective licence holders a clear fiscal regime is being set out and the rationale for that regime has been explained. This should further engender industry confidence in the stability and predictability of Ireland’s oil and gas fiscal terms and allow the industry to focus on effective and timely exploration effort.