Chapter 4

Petroleum production tax

696G Interpretation and application (Chapter 4)

(1) In this Chapter—

“cumulative field costs”, in relation to a relevant period of a company in respect of a taxable field, means the aggregate of field costs—

(a)for that relevant period, and

(b)for any preceding relevant period;

“cumulative field gross revenue”, in relation to a relevant period of a company in respect of a taxable field, means the aggregate of the gross revenues—

(a)for that relevant period, and

(b)for any preceding relevant period,

less the aggregate petroleum production tax payable by the company in respect of the same taxable field for all preceding relevant periods;

“eligible expenditure”, in relation to a relevant period of a company in respect of a taxable field, means the aggregate of the amounts of—

(a)all expenditure, including exploration and development expenditure wholly and exclusively incurred by the company in the carrying on of petroleum activities for the relevant period in respect of a taxable field,

(b)all expenditure, including exploration and development expenditure wholly and exclusively incurred by the company in the carrying on of petroleum activities in respect of any preceding relevant period where such expenditure was not previously allowed as a deduction in computing petroleum production tax, and

(c)all abandonment expenditure where an allowance may be claimed by reference to the provisions of section 695;

“field costs”, in relation to a relevant period of a company in respect of a taxable field, means the aggregate of all expenditure, including exploration expenditure, development expenditure and transportation expenditure, wholly and exclusively incurred by the company in the carrying on of petroleum activities in respect of that taxable field;

“gross revenue” means all sales of petroleum extracted for a relevant period from a taxable field including any amounts derived from the assignment, disposal or sale of any assets, interests, options or rights attaching to or related to a taxable field;

“net income”, in relation to a relevant period of a company in respect of a taxable field, means the gross revenue less eligible expenditure incurred in respect of that taxable field;

“petroleum production tax” has the meaning given to it by section 696H;

“relevant period” means an accounting period or part of an accounting period which commences on or after 18 June 2014;

“R factor” in relation to a relevant period of a company in respect of a taxable field, means an amount determined by the formula—

where—

A is the cumulative field gross revenue of the company in respect of the taxable field in relation to that relevant period, and

B is the cumulative field costs of the company in respect of the taxable field in relation to that relevant period;

“specified licence” means—

(a)an exploration licence (other than a licence arising from the exercise of a licensing option issued prior to 18 June 2014),

(b)a reserved area licence, or

(c)a licensing option,

that is granted on or after 18 June 2014;

“taxable field” means an area which was the subject of a specified licence and which is now the subject of a petroleum lease;

“transportation expenditure” means expenses incurred wholly and exclusively on the transportation of petroleum via pipeline from the taxable field to a place where it is first landed in the State or if produced on a platform, from the wellhead to the carrier if the carrier serves as the point of export.

(2)In this Chapter, section 684 shall apply subject to the modification that the section shall be read, as if references to expenditure and activities carried on under a licence within the meaning of section 684, are references to expenditure and activities carried on under a specified licence and to any other necessary modifications.

(3)For the purposes of applying this Chapter—

(a) where a part of an accounting period of a company is a relevant period, all amounts referable to the accounting period shall be apportioned, on the basis of the proportion which the length of the relevant period bears to the length of the accounting period of the company, for the purpose of ascertaining any amount required to be taken into account in respect of the relevant period, and

(b) expenditure incurred on or after 18 June 2014 by a company in an area which is not a taxable field but which subsequently becomes a taxable field (or part of such a field) shall be treated as if it had been incurred by the company on the day on which the area first becomes a taxable field (or part of such a field).