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The United Kingdom considers a new tax system to replace the oil superprofits tax

The United Kingdom is exploring the implementation of a new tax system for oil and gas producers to replace the superprofits tax, set to end in 2030.

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The British government is contemplating a change in the taxation of oil and gas producers, aiming to replace the superprofits tax introduced in 2022. This exceptional tax, currently set at 38%, was introduced during the energy crisis, as hydrocarbon prices soared, particularly due to the war in Ukraine.

The tax authorities and the Treasury have opened a public consultation to determine the future shape of this tax regime, designed to ensure a fair contribution from energy companies when prices are exceptionally high. Initially scheduled to last until 2025, the superprofits tax was extended several times, with an end date now set for 2030. The new system could thus align with a longer-term vision, revising the tax arrangements for energy companies based on price fluctuations.

A precedent for taxing superprofits in several European countries

Similar measures have been implemented in other European countries, including Spain and Italy. These countries introduced taxes aimed at capturing a portion of the exceptional profits generated by major energy companies, such as Shell and BP, which posted record results in 2022. The British tax specifically targeted these oil giants, whose profits were boosted by rising hydrocarbon prices.

European governments justified the introduction of these taxes as necessary to distribute the exceptional revenues of oil and gas companies fairly, especially in the context of a global energy crisis, which led to a significant increase in costs for consumers.

An evolving tax framework to address energy price uncertainty

As the superprofits tax is set to end in 2030, the British government finds itself at a crossroads, seeking to adapt its energy taxation in response to a constantly evolving economic and geopolitical environment. The ongoing consultation aims to examine the feasibility and effectiveness of such a system, which could include a more flexible formula, adjusted according to energy price developments.

This revision of the tax regime comes at a time when the United Kingdom, like other nations, is looking to maintain a stable public funding policy while ensuring a fair contribution from the most profitable sectors. The outcome of this consultation could play a key role in the country’s energy strategy heading into 2030.

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