New LNG tax measures in British Columbia

The Province of British Columbia (B.C.) has introduced new LNG tax measures to support balanced and stable tax revenues.

As part of an amendment to the Depreciation of Industrial Improvements Regulation under the Assessment Act, the new measures will allow a fixed depreciation rate regime, specific to large LNG facility improvements. This will help smooth provincial property tax revenues where development occurs.

Stable tax revenues

Under the Assessment Act, new LNG plants would be classified as Class 4, Major Industry. LNG capital investments are projected to far surpass other Class 4 investments in the province. To allow for greater stability to the resulting provincial tax revenues from LNG facilities, changes to the regulation will enable the following:

• A one-time depreciation to 60%, to be applied during the plant construction and for the first 15 years of full operation.
• An 8% annual depreciation rate starting in the sixteenth operating year, accumulated annually to a current maximum of 80%.

Competitive framework

These changes will shift some of the tax burden to later in the project’s lifetime, as well as ensuring a competitive, balanced and equitable framework for the industry. This approach also means that taxes for other taxpayers in the area will not increase rapidly over time as a result of the depreciating assessment of the LNG facility. Municipal property tax revenues will not be affected by these amendments.

Pacific NorthWest

For the Pacific NorthWest LNG project, taxes paid to the District of Port Edward are being dealt with under a separate agreement signed in December 2014. Pacific NorthWest LNG will provide negotiated municipal property tax payments to the district over the next 25 years, as well as infrastructure investments.

Pacific NorthWest LNG will also pay the District of Port Edward upfront monthly sums in 2015, allowing the district to begin preliminary work in the community.

Adapted from press release by Katie Woodward

Read the article online at: https://www.lngindustry.com/liquid-natural-gas/21052015/lng-tax-measures-create-stable-framework-801/