UK's Chancellor, George Osborne has announced several new tax breaks aimed at attracting more investments in North Sea oil and gas.
He said that the income from older fields will not have to pay full duty and this will make sure that the field is fully exploited. The Brown Field Allowance will allow firms to shield up to £500 million of income when they are boosting production from established fields. This will allow firms to save tax by as much as £160 million.
The tax breaks is the latest in a series of steps taken by the government to boost investments following a decision to increase the supplementary charge on North Sea producers from 20 per cent to 32 per cent in 2011, which is severely criticized by the industry.
Mr Osborne said, "Today's tax allowance is more good news for the North Sea, good news for jobs and good news for the broader economy. It will give companies the incentive to get the most out of older fields, creating jobs and delivering more revenue for taxpayers."
According to estimates, the new tax breaks will cost about £100 million per year initially to the Exchequer. However, government officials say that the long term tax benefit to the economy will be much higher.
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