In my most recent column for State Tax Notes, I provide an update on H.B. 331, which was passed by the State Legislature in 2018 to create a mechanism for the issuance of up to $1 billion in bonds to finance oil and gas tax credit purchases. I also look at budget tensions created
Jon Iversen is a partner based in Stoel Rives' Alaska office who provides tax planning and tax structuring advice and represents clients in tax audits and appeals. One of the most highly rated attorneys in the state in his field, Jon has extensive experience counseling clients on state and local tax audits and appeals, incentives, and financing associated with Alaska’s oil and gas production tax credits. Jon also counsels national and international companies regarding economic development opportunities in the region, including unique issues presented by the Arctic.
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Alaska’s rebatable production tax credit program was created by state legislators to be an incentive for explorers and small producers to invest in oil and gas exploration and production in the state but was hurt by its own success when oil prices dropped. The legislature repealed the program but a queue of valid outstanding credits…
Alaska’s oil and gas production tax has been subject to continuing debate and change as lawmakers and policymakers struggle with balancing budgets in times of volatile oil prices while also encouraging the investment necessary to monetize the state’s resources to run its government, create jobs, build and maintain infrastructure, and promote economic activity. In my…
Last Tuesday, Alaska voters rejected a referendum proposal that would have repealed oil and gas production tax legislation signed into law by Governor Sean Parnell in May 2013, known the “More Alaska Production” Act.
Continue Reading Alaska Voters Reject Referendum Regarding Oil and Gas Production Taxes
Senate Bill 21, which was recently signed into law, significantly alters Alaska’s Oil and Gas Production Tax regime. Although discussions regarding this law have largely been focused on North Slope activity, other areas of the state are also affected.
To understand the relevance of the amendments, it is useful to have a basic understanding of…
On January 16, 2013, Alaska Governor Sean Parnell introduced proposed legislation that would significantly alter Alaska’s Oil and Gas Production Tax regime. The current law, known as Alaska’s Clear and Equitable Share Act (“ACES”), was enacted in 2007 and is located in Alaska Statutes 43.55.011 et seq. This tax is levied on the net profits of oil and gas production from leases or properties in the state, except for the federal and state royalty share and oil and gas used in drilling or production operations. In this context, the term “net profits” is essentially the gross value at the point of production, also known as wellhead value (market price less transportation costs) less upstream operating and capital costs.
The tax that is levied on net profit per Btu equivalent barrel of oil and gas is the sum of (1) a base tax rate of 25% and (2) a progressive surcharge that is calculated on a monthly basis and starts at 0.4% for every $1 by which net profit per barrel exceeds $30, up to $92.50. For net profits over $92.50, the progressive surcharge equals the sum of 25% (0.4% times $62.50) plus 0.1% per every additional $1 of profit per barrel, up to a maximum progressive surcharge of 50%. Thus, the maximum total nominal tax rate is 75%. The tax rates under ACES, particularly the progressive surcharge, have been and will continue to be hotly debated.Continue Reading Proposed Alaska Oil and Gas Production Tax Bill Would Reduce Tax Rates, Alter Credits