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16 Jul, 2022 08:42

UK approves windfall tax on oil and gas industry

The levy targets extra profits made from surging energy prices
UK approves windfall tax on oil and gas industry

British lawmakers have approved a 25% windfall tax on the oil and gas industry, hoping to raise an extra £5 billion ($6 billion) in one year to ease the cost of living crisis for the nation’s households, Reuters reported earlier this week.

The Energy Profits Levy imposed on oil and gas producers in the British North Sea targets extra profits made from surging commodity prices amid rising demand. Over the past year the cost of gas has spiked by over 70% and crude oil prices by over 30%.

The tax was initially announced by the government in May and has now been approved by the lower chamber of the British Parliament, with some amendments. To become law, the bill still has to pass through the upper chamber, however the step is seen as largely symbolic.

The draft law lists 2025 as the end date and allows energy firms to offset some operating costs against the tax.

Oil and gas companies working in the British North Sea have warned that the windfall tax will reduce investment and slow production growth in the area.

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