Trinidad Makes It Easy for Oil Corporations

A new oil profits tax law instituted by the government of Trinidad and Tobago, retroactive to the beginning of 1980, allows oil corporations to increase their write-offs and tax deductions.

The law, passed unanimously by Trinidad and Tobago's House of Representatives on April 2?, sets up production allowances of up to 25 percent of gross income for petroleum produced from small oil fields, in addition to lowering the bar, rate of taxation of oil corporations from 50 to 45 percent. It also introduces new allowable deductions of 35 percent of gross income for land production operations and 60 percent for marine operations; 140 percent of new capital expenditure for land operations and 100 percent for marine platforms; and ISO percent of the direct cost of drilling exploration wells. Corporations can also deduct 128 percent of new capital expenditures for refining operations.

Trinidad and Tobago Energy Minister Errol Mahabir admitted that the new measures will probably cost the government about $U.S. 40 million in foregone tax revenues for 1980 and 1981 alone. But, he said, these tax incentives for corporations should generate higher production levels which will result in increased revenues for Trinidad and Tobago later on.

The measures are designed to "develop a taxation regime that would bring harmony with international tax systems and provide equitable treatment for all petroleum companies operating in Trinidad and Tobago," Mahabir said.

The principal oil corporations with Trinidad and Tobago operations are Texaco, Amoco, Tesoro, and Occidental Petroleum.