PRRT is a super-profits tax. It is deliberately designed to allow major projects to recoup their capital investments. After that time, PRRT is then payable at a rate of 40 per cent. This is on top of income tax – making for an effective tax rate of 58 per cent. Low prices and high construction costs have contributed to Chevron not being liable for PRRT yet. This is the way the tax is designed to work and the rules apply to all resources companies in the same way.
Based on a range of price and other assumptions, Chevron Australia expects to first pay PRRT somewhere between 2029 and the mid 2030s and expects to pay between $60b and $140b over the life of the projects.
This forecast is consistent with the findings of the Government’s Callaghan Review, which forecast a significant boost in PRRT revenues from the 2020s.
The review found also found “the PRRT remains the preferred way to achieve a fair return to the community for the extraction of petroleum resources without discouraging investment.