Dublin Reviews Taxes in Energy Sector

The Irish government is reviewing its generous fiscal regime for oil and gas companies, the Minister for Energy has announced.

The move follows submission of a parliamentary report on the sector, which makes a number of major recommendations.

Pat Rabbitte, Ireland’s energy minister, said Tuesday that the government would appoint consultants to provide advice on whether changes to its fiscal regime were merited.

However, Rabbitte played down any major increase in Ireland’s tax charges on private companies involved in exploration, saying the extent of its natural resource finds were overshadowed by other European states.

Ireland has a 25% rate of corporate tax and a profit resource rent tax of up to 15% depending on the profits generated by an oil or gasfield. This is significantly below the rates of tax levied in Norway, where companies pay up to 78%. The select committee report focused on comparing Norway's management of its hydrocarbon resources with the situation in Ireland, where early hopes of great riches have not been realized.

In the Dail (Parliament) the Minister said that a full debate would take place, as well as his department's acquiring "further independent expert advice on the fitness-for-purpose of Ireland’s fiscal terms" [in the sector].

The review should be concluded by the end of the year, he said.

Ireland has four offshore gasfields. The two biggest are the Kinsale Head gasfield, operated by Malaysian oil company Petronas, and the Corrib gasfield off Ireland’s west coast, being developed by Royal Dutch Shell.

The Financial Times says the move follows criticism from both members of parliament (TDs) and campaigners, who have warned the recession-hit country could miss out on an infusion of cash from hydrocarbon explorers.