New tax rates set oil-mining companies

Press, 17 August 1979, Page 4

New tax rates set oil-mining companies

PA Wellington Petroleum-mining companies will be treated as ordinary companies and pay tax at the rate of 45c in the dollar for resident companies and 50c in the dollar for nonresident companies under the Government s new oil-mining taxation policy announced yesterday. Until now they paid at the preferential tax rate of 30c and 45c in the dollar. . The changes are made in the Income Tax Amendment Bill introduced in Parliament yesterday. The Deputy Minister of Finance (Mr Templeton) said a review of the petroleumrtlining taxation legislation had been necessary because of changing international circumstances after the O.P.E.C. price increases in 19*73-74. The purpose was to bring New Zealand legislation more into line with taxation in other countries. The Government had aimed for a balance between the taxation take on petroleum activties and providing adequate incentives to encourage exploration for and development of indigenous petroleum resources. Mr Templeton said he believed the taxation propose Is to be fair and equitable, and the Government hoped they would lead to the resumption of exploration by private explorers. For a resident company, non-tesident withholding tax would be payable at the ncrmal 15 per cent rate on pro-

fits remitted overseas in the form of dividends. A new tax rebate of 20c for each $1 of petroleummining company dividends will be allowed to resident individuals. The rebate will be allowed even though the dividend may have passed through a number of companies before eventually being received by the shareholder.

Mr Templeton said special provisions have been included for the continuing development of the Maui field. There would be an immediate full deduction up to the year ending March 31, 1983, of development expenditure to be incurred in completing the Maui A platform/and a deduction of amounts of group income which will be appropriated to meet the expected costs of the Maui B installation. The companies concerned have agreed in return to forgo certain tax indemnity rights they have .in terms of their Kapuni and Maui gas supply contracts with the Government. Mr Templeton told Parliament that the new proposals had been accepted by the main oil exploration and development companies working in New Zealand. The Government will continue to have a 40 per cent share in oil exploration and a 51 per cent share of any oil finds, Mr Tetnpletofi said when answering Opposition questions during the debate on the bill. The proposals were the re-

suit of long negotiations with the oil companies and were not open to further consideration, Mr Templeton said. He rejected Opposition requests for the bill to go to a select committee.

“From the country’s point of view we have gained considerably in terms of a more balanced approach,” Mr Templeton said. The Leader of the Opposition (Mr Rowling); expfessing disappointment about the Government’s refusal to let the bill go to a committee, said the people of New Zealand were entitled to know what the implications of the proposals were. He said the. Opposition wanted to see the legislation Subjected to the widest possible examination in view of what he described as the Government's “fiddling,” which he said had frustrated earlier efforts by oil-exploration companies. The Minister of Energy (Mr Birch) said the Opposition Could not expect a select committee to negotiate on behalf of the Government or of Parliament.

! “It is fascinating to see the Labour Party come down on the side of the multi-national oil companies,” he said’. Mf J. A. Walding (Lab., Palmerston North) replied: “We are not on the side of the oil companies at all- Wt? are oh the side Of New Zealand. We just want to make sure the Government dees not bungle it as it Bungled it ! before:”