The Falkland Islands Government (FIG) is likely to earn somewhere in the region of 25 to 30% of the gross value of the oil resource spread over an expected field life of 25 years, it was stated at a public meeting in the capital Stanley earlier this week.
Member of the Legislative Assembly (MLA) Roger Edwards said: “The principal sources of revenue to FIG are a 9% royalty on the market value of each barrel of oil sold, and 26% corporation tax on the profits derived from sales. In common with any business, there are certain costs which are allowable in assessing taxable profit.
“The final tax take therefore depends on the allowable costs claimed by operators in the course of exploration and exploitation of the resource.”
The actual total taken in any given year will depend on numerous variables including the prevailing oil price and the rate of production, both of which will vary over the anticipated field life of at least 25 years.
Also during a discussion relating to the oil industry MLAs noted that the nine per cent royalty was set some years ago.
They said it was considered very reasonable by the oil industry and was set at a consistent rate in order to attract the industry to an area that had at the time no proven oil resource. (PN)