The Government stands to make hundreds of millions of euro from increased taxes on revenues from offshore oil and gas exploration as part of a package which changes the way the industry is regulated in Ireland.
Under current arrangements, the oil and gas industry pays a standard 25 per cent corporate tax. The industry will now face additional taxes, which Minister for Communications, Energy and Natural Resources Eamon Ryan has said will be levied on future revenues from exploration off the Irish coast.
The new regime, which comes into force with immediate effect, includes a profit resource rent tax where additional taxes of up to 40 per cent will be placed on oil and gas revenues depending on profits and the accumulated level of capital investment.
Mr Ryan said the changes bring Ireland "into line with other comparable countries."
"The basis for this decision was to ensure a greater return to the State from our own natural resources, while maintaining the incentive for companies to explore off our shores," Mr Ryan said. "I believe these changes achieve this balance. With Shell and Exxon Mobil currently drilling in Irish waters, the Government forsees an increase in the number of oil companies coming to Ireland due to over-exploration elsewhere."
A number of new exploration licences will now be granted to oil and gas companies in the Porcupine Basin, an area spanning 63,500 kilometres off Ireland's south west coast. They are expected to be granted in the Autumn.
The new regime also includes changes to licensing conditions such as a reduction in the overall length of certain licences and the reduction of the confidentiality period relating to data acquired by licensees and furnished to the Department.
"Ireland's oil and gas is a resource of the people. The Government acts as caretakers/owners of these resources on their behalf. It has a duty to ensure appropriate return and to ensure that they are adequately and properly explored. Overall, I feel these changes represent a licensing regime that is in the greatest public good," he said.
The Government has been criticised by opposition parties and environmental groups over the low tax-take from projects which have been granted exploration licences since 1992 and the changes come following a Government report by economic consultants Indecon in the area.