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Page added on November 29, 2007

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UK: MPs’ warning over tax risk to oil industry

THE Treasury has been warned against further tax raids on North Sea Oil companies after three successive tax rates created a “perception of instability” in the industry.

The industry, which employs more than 100,000 people in Scotland, needs a more simple and consistent regime, MPs on the Scottish affairs committee concluded after their 18-month inquiry into the effects of tax increases on the oil industry.

Since 2002, there have been a series of tax hikes, including a doubling of the supplementary charge to 20 per cent in 2005. It would take another three or four years before the full impact could be assessed, MPs said.

“A simple fiscal regime that is consistent and predictable would be of most benefit to the industry and the UK in the long term,” the report concluded. “Tax increases have the potential to damage investment and shorten the life of the industry.”


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