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Govt To Remove Tax Obstacle to Gas Exploration

25 August 2004

Government to remove 183-day-rule obstacle to gas exploration

The government will introduce legislation to remove a tax obstacle to gas exploration in New Zealand, as part of its package of measures to boost exploration over the next five years, Revenue Minister Michael Cullen announced today.

The ‘183-day rule’, which requires non-residents from some countries with which New Zealand has a double tax agreement to leave the country within 183 days if they want to remain tax-exempt on their New Zealand-sourced income, will be waived until late 2009 for non-resident, offshore rig operating companies.

“In effect, non-resident, offshore rig operators will be exempted from paying company tax in New Zealand on their profits for the same period as the gas exploration royalty incentives announced on 14 June, from 30 June 2004 to 31 December 2009,” Dr Cullen said.

“The government recognises that the 183-day rule can create inefficiencies and detrimentally affect drilling operations. Although it may be economic for non-resident, offshore drilling rigs to be here for longer than six months, there are strong incentives for them to quit New Zealand within 183 days, before they become taxable. Their subsequent replacement then adds to the cost of gas exploration in New Zealand.

“Lifting the 183-rule for non-resident, offshore rig operators for the next five years should give a much needed boost to finding new gas fields,” Dr Cullen said.

The change will be included in the taxation bill to be introduced in November.


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