A draft of new legislation for the introduction of transferable tax history (TTH) for the North Sea oil and gas industry has been published by the UK Government, taking it one step closer to being implemented.
Government has said that TTH will be available for all North Sea license transfers accepted on or after 1st November 2018 by the Oil and Gas Authority in a bid to help attract new investment and prolong the lifespan of mature fields.
Under the proposed system, first put forward in the Budget in November 2017, oil companies can build up credits on the taxes paid during the production life of the field and can use those credits to offset decommissioning costs, once production has ceased.
Mike Tholen, upstream policy director at Oil and Gas UK, said: “The publication of draft legislation for Transferable Tax History is greatly welcomed by the industry as it’s an additional tool in the deal toolkit, with the potential for bringing new investment to the basin.
“TTH will help increase recovery from existing fields and encourage fresh investment which will both help generate activity for our hard-pressed supply chain. It will also help extend the lives of many mature fields and postpone decommissioning.”