The UK government plans to close a tax loophole used by multinational corporations, including BP PLC, to reduce taxes on energy trading profits. Treasury Secretary Rachel Reeves stated the reform targets foreign branch structures used to minimize tax obligations.
The Treasury expects the move to raise hundreds of millions of pounds in additional annual tax revenue. BP PLC shares fell 1.0% in London trading following the announcement.
This reform is part of a broader strategy to increase the tax burden on the oil and gas sector. The industry currently faces a 78% total tax rate on profits when prices are high.