NEW ZEALAND: GENERAL METADATA
Data documentation
General notes
The fiscal year in New Zealand runs from 1 July to 30 June. Following OECD convention, data are allocated to the starting calendar year so that data covering the period July 2005 to June 2006 are allocated to 2005.
Producer Support Estimate
New Zealand’s fiscal regime applicable to the oil and natural-gas industry combines a corporate income tax and royalty-based taxation. The corporate income tax amounts to 28% of taxable income, where taxable income is defined as any assessable income less deductions and net losses, the latter of which can be carried forward indefinitely. Generally, companies cannot deduct expenditures of a capital nature when incurred. However, deductions for certain exploration and development expenditures of a capital nature are available for oil and natural-gas companies (see Tax Deductions for Petroleum-Mining Expenditures).
Depending on the year of the discovery, different royalty regimes apply. For discoveries made on or after 1995, royalties are set out in detail in the 2005 Minerals Programme for Petroleum and comprise of the following:
an ad valorem royalty (AVR) component of 5% payable on the basis of either a sales price received or, where there has been no sale or no arm’s length sale, the deemed sales price; and
an accounting profits royalty (APR) component of 20% payable on the difference between revenue received from the sale of products and the costs of extracting, processing and selling those products up to the point of sale.
In case of an exploration permit, the permit holder is liable to pay only the AVR. For all mining permits with net sales above NZD 1 million, the permit holder is required to calculate for each period for which a royalty return must be provided to both the AVR and the APR, and pay whichever is higher. Typically, AVR is paid in the early years of production as prior costs are netted against revenue and at the end of the field’s life, as production falls. APR is typically paid during the peak years of production of non-marginal fields. In order to encourage exploration for new natural-gas reserves, the government reduced royalty rates from June 2004 through 31 December 2009 (see Reduction in Royalty Payments for Petroleum). For discoveries after 31 December 2009, the same royalty rates that are in operation before 30 June 2004 are applicable.
More generally, royalties are payable for petroleum that is (1) discovered and sold, (2) used in the production process as fuel, (3) exchanged or transferred out of permit boundaries without sale or (3) left unsold at the expiry of the permit (Ernst and Young, 2013). No royalties are payable on petroleum that is flared or returned to natural reservoirs within the permit boundaries (e.g. the re-injection of gas).
In 2008, the government introduced an emissions trading scheme (ETS) for greenhouse gases. Legislation for the scheme has been subsequently amended with the latest enacted in 2012. There are no special exceptions for the oil and gas sector under the current ETS regime.
OECD Companion to the Inventory of Support Measures for Fossil Fuels 2021
Nov-22
Data for 2021 are preliminary and may contain OECD-generated estimates.
Annual
Indicator
PSE: Producer Support Estimate
GSSE: General Services Support Estimate
CSE: Consumer Support Estimate
Stage
EXTRACT: Extraction or mining stage
TRANS: Transportation of fossil fuels (e.g., through pipelines)
REFIN: Refining or processing stage
GENER: Use of fossil fuels in ectricity generation
INDUS: Use of fossil fuels in the industrial sector
END: Other end uses of fossil fuels
Statutory or Formal Incidence
consumption: Direct consumption
returns: Output Returns
income: Enterprise Income
inputs: Cost of Intermediate Inputs
labour: Labour
land: Land and natural resources
capital: Capital
knowledge: Knowledge
Users of tax expenditure estimates should bear in mind that the Inventory records tax expenditures as estimates of revenue that is foregone due to a particular feature of the tax system that reduces or postpones tax relative to a jurisdiction’s benchmark tax system, to the benefit of fossil fuels. Hence, (i) tax expenditure estimates could increase either because of greater concessions, relative to the benchmark tax treatment, or because of a raise in the benchmark itself; (ii) international comparison of tax expenditures could be misleading, due to country-specific benchmark tax treatments.
Measures appearing in the Inventory are classified as support without reference to the purpose for which they were first put in place or their economic or environmental effects. No judgment is therefore made as to whether or not such measures are inefficient or ought to be reformed.
NEW ZEALAND: GENERAL METADATA
Data documentation
General notes
The fiscal year in New Zealand runs from 1 July to 30 June. Following OECD convention, data are allocated to the starting calendar year so that data covering the period July 2005 to June 2006 are allocated to 2005.
Producer Support Estimate
New Zealand’s fiscal regime applicable to the oil and natural-gas industry combines a corporate income tax and royalty-based taxation. The corporate income tax amounts to 28% of taxable income, where taxable income is defined as any assessable income less deductions and net losses, the latter of which can be carried forward indefinitely. Generally, companies cannot deduct expenditures of a capital nature when incurred. However, deductions for certain exploration and development expenditures of a capital nature are available for oil and natural-gas companies (see Tax Deductions for Petroleum-Mining Expenditures).
Depending on the year of the discovery, different royalty regimes apply. For discoveries made on or after 1995, royalties are set out in detail in the 2005 Minerals Programme for Petroleum and comprise of the following:
an ad valorem royalty (AVR) component of 5% payable on the basis of either a sales price received or, where there has been no sale or no arm’s length sale, the deemed sales price; and
an accounting profits royalty (APR) component of 20% payable on the difference between revenue received from the sale of products and the costs of extracting, processing and selling those products up to the point of sale.
In case of an exploration permit, the permit holder is liable to pay only the AVR. For all mining permits with net sales above NZD 1 million, the permit holder is required to calculate for each period for which a royalty return must be provided to both the AVR and the APR, and pay whichever is higher. Typically, AVR is paid in the early years of production as prior costs are netted against revenue and at the end of the field’s life, as production falls. APR is typically paid during the peak years of production of non-marginal fields. In order to encourage exploration for new natural-gas reserves, the government reduced royalty rates from June 2004 through 31 December 2009 (see Reduction in Royalty Payments for Petroleum). For discoveries after 31 December 2009, the same royalty rates that are in operation before 30 June 2004 are applicable.
More generally, royalties are payable for petroleum that is (1) discovered and sold, (2) used in the production process as fuel, (3) exchanged or transferred out of permit boundaries without sale or (3) left unsold at the expiry of the permit (Ernst and Young, 2013). No royalties are payable on petroleum that is flared or returned to natural reservoirs within the permit boundaries (e.g. the re-injection of gas).
In 2008, the government introduced an emissions trading scheme (ETS) for greenhouse gases. Legislation for the scheme has been subsequently amended with the latest enacted in 2012. There are no special exceptions for the oil and gas sector under the current ETS regime.
OECD Companion to the Inventory of Support Measures for Fossil Fuels 2021
Annual
Nov-22
Data for 2021 are preliminary and may contain OECD-generated estimates.
Indicator
PSE: Producer Support Estimate
GSSE: General Services Support Estimate
CSE: Consumer Support Estimate
Stage
EXTRACT: Extraction or mining stage
TRANS: Transportation of fossil fuels (e.g., through pipelines)
REFIN: Refining or processing stage
GENER: Use of fossil fuels in ectricity generation
INDUS: Use of fossil fuels in the industrial sector
END: Other end uses of fossil fuels
Statutory or Formal Incidence
consumption: Direct consumption
returns: Output Returns
income: Enterprise Income
inputs: Cost of Intermediate Inputs
labour: Labour
land: Land and natural resources
capital: Capital
knowledge: Knowledge
Users of tax expenditure estimates should bear in mind that the Inventory records tax expenditures as estimates of revenue that is foregone due to a particular feature of the tax system that reduces or postpones tax relative to a jurisdiction’s benchmark tax system, to the benefit of fossil fuels. Hence, (i) tax expenditure estimates could increase either because of greater concessions, relative to the benchmark tax treatment, or because of a raise in the benchmark itself; (ii) international comparison of tax expenditures could be misleading, due to country-specific benchmark tax treatments.
Measures appearing in the Inventory are classified as support without reference to the purpose for which they were first put in place or their economic or environmental effects. No judgment is therefore made as to whether or not such measures are inefficient or ought to be reformed.