UK to levy 25% tax on "windfall" profits of energy firms

May 26, 2022 8:18 AM ETXLE, SHEL, BPBy: SA News Team319 Comments

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  • UK Chancellor Rishi Sunak announced a 25% windfall tax on the oil and gas sector Thursday (XLE) (BP) (SHEL).
  • The tax is described as "temporary" and will be phased out as oil and gas prices return to "historically low levels."
  • The levy is expected to raise $6.3b over the next year.
  • Companies that elect to invest further in the UK oil and gas sector will receive accelerated tax relief under the proposal.
  • The Chancellor said, "the oil and gas sector was making extraordinary profits not because of recent changes to risk-taking, innovation or efficiency, but as a result of surging global commodity prices."
  • Thursday's announcement marks a U-turn from the Johnson government, after the Prime Minister said, "what the country needs is a government that will take a big decision about how to fix our energy sector, and you don't do that simply by clobbering the companies that we need to make investments in our domestic energy."

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