Competition for attracting oil and gas investments has driven changes in tax structures around the world.
That’s according to a new report from professional services firm EY which explores the changes made to oil and gas corporate tax regimes across 87 countries last year.
It suggests not only have many essential tax adjustments already been made in response to a low oil price environment but a high number of governments are continuing to do so.
Tax systems in Canada and Mexico are among the most recent to undergo additional changes, where oil and gas royalties have been reviewed.
The Mexican Government has made modifications to the fiscal and economic terms of oil and gas block licensing and production contracts to enhance their attractiveness.
Similarly, Saudi Arabia has slashed the corporate income tax rate from 85% to 50% for upstream oil and hydrocarbon producing companies to attract foreign investors.
Several other resource-rich countries in the Middle East and the Asia-Pacific region are also pursuing a similar agenda.
Alexey Kondrashov, EY Global Oil & Gas Tax Leader, said: “Governments of oil and gas producing countries must monitor tax structures and revise them accordingly in an era of lower commodity prices and volatility, particularly as some major producing countries have made important adjustments to attract capital.
“Maintaining investment and interest in oil and gas projects in any country requires a clear fiscal policy and a tax regime that provides competitive returns to investors.”