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Polish Hydrocarbon Group Warns On New Taxes

By Ulrika Lomas, Tax-News.com, Brussels

19 November 2012


The Polish Exploration and Production Industry Organization (OPPPW), which represents hydrocarbon businesses in the country, has warned that proposed new taxes may slow down exploration activities in the country.

OPPPW cited a planned 25% cash flow tax, as well as new royalties on gas of 5% and on oil of 10%, as well as quadrupled extraction fees. The organization argues that, in conjunction with taxes already in place, the total payable will "significantly exceed" a 40% tax total promised by the government.

OPPPW further complained that the new fiscal regime amounts to taxation prior to any return on investment, and does not take account of the low profit margin and capital-intensive nature of unconventional and offshore projects. Another concern was lack of clarity about the role of the start-owned NOKE (National Energy Minerals Operator), which would be "both investor and regulator." OPPPW predicted that it would slow down decision-making and limit investment opportunities.

The organization also called for a loss carry-forward mechanism, recognition of upstream operations as a specific business operation under the tax code, and the introduction of special provisions to real estate taxes in relation to shale reservoirs. OPPPW also argued that production concessions already granted should not be subject to new fiscal rules, since that would amount to a retroactive law.

TAGS: Energy | tax | business | royalties | law | fees | oil and gas | extraction tax | Poland

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