Tax5 Aug 2022 13:21
I was incorrect on Tax
Just had a very thorough reply from UOG as below
Whilst the company made a Gross Profit of $12.3 million in the year, there are a number of other costs that need to be considered before you get to the Profit after tax line. These costs include Operating and Administration cost, Finance costs and finally tax. (see below extract from our annual report). The full annual report is available on our website.
United’s income from Egypt is taxed in Egypt. Under the PSC terms, any tax that is due by United is paid for out of the Government take, therefore, whilst we don’t actually pay the tax directly to the tax authorities, it’s paid for on our behalf. Under the accounting rules, we then show that tax under the tax line and also under the other income line (see below).
I appreciate the above is a little confusing, but the key point to remember is that no additional tax is paid for by United in relation to our Egyptian operations.
In the UK, no tax is paid on Egyptian income, as the tax charge on Egyptian profits is taxed in Egypt.
Cost Pool
In relation to your query on the cost pool, as you have seen in our presentations etc, our share of net production under the PSC is c42.53%. This is made up of 30% for recovery of costs (“Cost Oil”) and 12.53% of profit oil.
Therefore the historical cost pool is available to United (through what is called Cost Oil) as we produce and we will get value for that over the life of the field.Under the terms of the PSC, 30% of our net production is available to be taken to repay costs, (ie costs in the cost pool). The higher our production is, the quicker we recover that “cost pool”.
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