Poland offers tax breaks for shale gas extraction
March 12, 2014
Poland's government adopted a bill on hydrocarbons' taxation, including a cap on shale gas taxation at some 40% of income and introduction of the burden only as of 2020, with budget receipts in 2020-2029 estimated at PLN 10.0-16.1 billion, the cabinet said on Tuesday.
"Taxation for central budget will become a fact only in 2020 - by that time extraction of shale gas will be free from taxes," PM Donald Tusk said during a press conference after the cabinet sitting which passed the bill.
The total tax burden for shale gas extraction should not surpass on average 40% of income, which "should be encouraging for entrepreneurs," Tusk added.
That burden will consist of two elements - a royalty on extraction and a special hydrocarbons gains tax, a government press statement said.
The royalty on unconventional resources will measure 1.5% of the value of extracted volume in the case of shale gas and 3% in the case of shale oil.
In conventional resources, the levy will measure 3% in the case of natural gas and 6% in the case of crude oil.
The special hydrocarbons tax will be flexible and will measure from 0 to 25%, depending on the level of incurred costs and generated revenues, the cabinet said.
"In practice, if the extraction operations bring no profit or if the profit isn't significant a company won't pay that tax," the statement read.
The Polish government estimates total budget receipts on account of these two taxes in 2020-2029 at PLN 10.0-16.1 billion, the statement also read.