Petroleum Production Tax

PPT applies to net income from oil and gas discoveries made under petroleum authorisations granted on or after 18 June 2014. The tax is payable in addition to the existing Corporation Tax (CT) rate of 25% applicable to excepted trades. PPT payments are allowed as a deduction in calculating the amount of CT due.

How is PPT calculated?

PPT is calculated on a field by field basis and applies once a field starts producing oil or gas. It applies to a taxable field’s net income. The rate on this is determined by the profit ratio (known as the R factor) of the field. The ‘R factor’ is calculated by using the formula A/B where (in respect of a particular field):

  • A is the cumulative gross revenues
  • B is the cumulative field costs.

Minimum PPT payment

The tax payable under the profit ratio formula may be less than 5% of the annual gross revenues (net of transportation costs). If so, a minimum PPT payment of 5% will be charged.

Please see PPT manual for the appropriate PPT rates and details of how to calculate the PPT payable.

The company must use the Revenue Online Service (ROS) to file their Form CT1 including  details of the PPT payable.