Economic Report 2017

E C ONOM IC R E P OR T 2 0 1 7

T h e fiscal and r e gulat or y t e r m s m ust also r e m ain at t r act iv e if t h e UKC S is t o w in cap it al ov e r ot h e r b asins. W h ile m any gov e r nm e nt s acr oss t h e w or ld h av e looke d t o count e r t h e im p act of falling t ax r e ce ip t s b y incr e asing m ar ginal rates oĨ tadž, in the UK, the oƉƉosite aƉƉroach has ďeen taŬen͘ Zates haǀe Ĩallen Ĩrom as high as ϴ1 Ɖer cent ũust Ĩiǀe years ago, doǁn to a madžimum oĨ ϰ0 Ɖer cent in an attemƉt to attract Ĩresh inǀestment ďy maintaining ƉostͲtadž materiality ;see section ϲ͘ϰ Ĩor more on Ĩiscal ƉolicyͿ͘ tithout this interǀention, many inǀestors ǁould not e v e n conside r t h e UK as a de st inat ion for inv e st m e nt . F igur e 26 sh ow s t h e av e r age m ar ginal t ax r at e for oil op p or t unit ie s acr oss a m ix t ur e of conce ssion and p r oduct ion sharing regimes͘ then comƉaring the Ĩiscal attractiǀeness oĨ oil and gas Ɖroducing nations, the UK has moǀed Ĩrom ďeing ďeloǁ aǀerage in 2012 to ďeing ǁithin the toƉ Ƌuartile ʹ a ǀery Ɖositiǀe sign Ĩor inǀestors͘

Figure 26: Fiscal Attractiveness of the UKCS Compared with other Oil and Gas Producing Nations

100%

Gov ernment Share of N PV ( undiscounted) Av erage Gov ernment Share of N PV ( undiscounted)

9 0%

8 0%

7 0%

UK

6 0%

5 0%

4 0%

3 0%

Av erage Gov ernment Tax of N PV

2 0%

10%

0%

Source: Wood Mackenzie

5 0