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The Australian Petroleum Production & Exploration Association (APPEA) has said it does not believe there is a case for reforming the Petroleum Rent Resource Tax.
In its submission to the Government's PRRT review, APPEA said: "The PRRT has been instrumental in promoting a long term and robust exploration effort in Australia to find and develop our oil and gas resources. It has also provided investors with an efficient taxation system that recognizes the need for companies to achieve a return on invested funds before the imposition of a resource tax liability."
"Overall, PRRT has been critical to Australia's success as a global leader in the supply of gas to domestic and worldwide markets."
The PRRT is assessed on a petroleum project basis and is levied at a rate of 40 percent of a project's taxable profits. Taxable profit is calculated by deducting a project's eligible project expenses from the assessable receipts derived from the project.
In November 2016, the Government commissioned an independent review of the PRRT, crude oil excise, and associated federal royalties. The review is examining the design and operation of the PRRT, crude excise oil, and associated federal royalties that apply to the onshore and offshore oil and gas industry. It will advise the Government on the extent to which the PRRT operates as originally intended, and address the reasons for the recent decline in PRRT revenues.
The panel will report back to the Government by April 2017.
According to APPEA's submission, the next generation of investments, as well as extensions to existing and committed projects, "will be heavily dependent on the terms of the tax system, as it has an important impact on project economics and investor returns."
"Any changes that lead to increased imposts under the resource taxation system will damage the ability of Australia to attract projects and thereby diminish the capacity to create sustainable taxation revenue streams for future generations," APPEA stated.
APPEA added that the PRRT "provides a balanced framework that imposes a high tax burden on investors [only] after a modest return has been achieved from individual projects," and stressed that it must continue to operate in this fashion.
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