According to the Post, Chief Executive for the company, Shamsul Azhar Abbas, says “a provincial tax of up to 7 per cent on export profits, after development costs are recouped, could jeopardize planned investments in the upstart sector.”
The company has proposed a $9 – $11 billion LNG plant at Lelu Island on the northern shores.
Therefore, the company is seeking a compromise with the federal government, which includes a capital cost allowance of 30 per cent, up from about 8 per cent under current regulations.
The Post has cited an associate professor at B.C.’s Sauder School of Business as saying “the change could generate $75 – $100 million in tax savings over a 7-year period on every billion dollars invested.”
A similar request, later being rejected, was made by the Canadian Association of Petroleum Producers during last year’s federal budget for the LNG sector, arguing the expense of facilities should be classified as manufacturing plants under Canadian tax provisions.
This would generate 30 per cent of the capital cost, enabling them to write of 90 per cent of their investment in 7 years, compared to the 27 years it takes under current regulations.
This is almost parallel to what’s currently being sought by Petronas.
Petronas bought the Calgary-based Progress Energy in 2012 for $5.2 billion, part of a $36 billion investment planned in Canada over 30 years.