On February 5, 2014, the BC government announced that it is
unlikely to release the detailed tax regime for the province's
proposed liquefied natural gas (LNG) sector before the fall
legislative session. In his address to the media, BC Finance
Minister Mike de Jong explained that he expects the government to
make the framework for the LNG tax public when he presents the
provincial budget on February 18, 2014, but tax rates are unlikely
to be released until legislation is tabled this fall.
In September 2013, the BC government cancelled the fall sitting
of the legislature on the basis that it required time to draft the
complicated LNG tax legislation. As noted in our prior
blog post, the government initially intended to finalize the
applicable tax rules by the end of November but decided to delay
providing details until completing further consultations with
industry and LNG project proponents.
The BC government faces the challenge of developing a tax regime
that will fund the promised 30-year $100 billion LNG
"Prosperity Fund", while ensuring that BC remains
competitive with other jurisdictions seeking to export LNG.
However, BC's LNG tax represents only one factor under
consideration as LNG proponents prepare to make final investment
decisions on their BC-based projects. In addition, project
proponents are continuing to navigate applicable environmental and
regulatory processes and engage with potentially impacted
stakeholders and First Nations.
At least ten LNG projects are currently planned in BC. No
final investment decisions have been made to date, but certain
project proponents have indicated that they intend to do so before
the end of 2014. It remains unclear whether delaying the
release of a detailed LNG tax regime will impact the ability of
proponents to make final investment decisions according to their
current project schedules. We will continue to monitor the
development of BC's LNG tax and will update
this blog as further details emerge.
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