Mineral Oil Tax

Mineral Oil Tax

The mineral oil tax was brought into effect on 1 January 2000.  It replaces the older excise duties on oils, which had its origins in the 1930s when customs were imposed on imported oil and on domestically produced products.

These duties were replaced by import excise duties, and a common rate structure was established in 1975.  Over time, liquid petroleum gas and some other fuels are bought into the net.  Reliefs were introduced for horticultural producers and sea fishing.

The tax is charged on products produced in or imported into the state. It applies to EU and non-EU imports. It covers light oils (principally petrol), heavy oils, diesel, kerosene, fuels, LPG, and substitute fuels, including biofuels.

There are scale rates applicable to the categories. The higher rates apply to fuel used as propellants for motor vehicles, while substantially lower rates apply to industrial and domestic heating oil.

The tax does not apply in broad terms other than to heating and propellant use, and there are reliefs within those uses.

Marked Fuel Trader Licence

The 2012 Finance Act replaced the mineral oil trader’s licence with a marked fuel trader’s licence. It also replaced the approval system for marked gas and oil kerosene traders with a marked fuel trader’s licence. The Mineral Oil Tax Regulations 2012 became operative on 1 January 2013 and replaced existing regulations.

Since 1 July 2012, persons who produce, sell, deal in, keep, or sell for delivery or delivery any mineral oil for use as a propellant, i.e. principally petrol and diesel or any aviation gas fuel, must hold an auto fuel trader’s licence for each premises from which they operate. The licences are annual. Equivalent provisions for marked fuel traders’ licences commenced on 1 October 2012.

A  reduced rate of tax applies to  gas, oil or kerosene where the Revenue is satisfied that

• it is used other than as a propellent
• has been properly marked and
• it all always kept and sold in accordance with the requisite regulations for such marked oil, gas or kerosene.

There are prescribed marker or dyes for a gas oil kerosene.  A marking may be added in a mineral oil tax warehouse in accordance with the conditions of the authorisation.  No other person shall add any identifying marker or any substance that has the same effect without Revenue’s consent.

A permanent legible notice is to be fixed in a permanent position over every vessel in which marked gas oil or kerosene is stored and on every pump from which it is supplied.  It is to state that it is an offence to keep marked gas oil in a fuel tank or use it in an engine or motor vehicle.

Fuels Covered

Mineral oil tax is payable on coal. A liable coal user is any person liable to pay mineral oil tax on coal.  They must make monthly returns and payments to Revenue.  They must keep records equivalent to those for mineral oil traders.

Mineral oil includes hydrocarbon oil, liquefied petroleum gas, substituted fuel, and additives. Hydrocarbon oil includes petroleum oil, oil produced from coal, bituminous substances, and liquid hydrocarbons. It does not include substances that are solid or semisolid at 15 degrees Celsius.

A carbon charge applies to petrol, aviation gasoline, and heavy oil used as propellant for air navigation or private pleasure navigation. This was extended in 2010. As of 2010, the mineral oil tax does not apply to coal.

Horticultural users are entitled to a partial reduced rate.

Carbon Tax

Finance Act 2012 confirms the Budget increase in the carbon tax on petrol and auto-diesel and provides for an increase, from 1 May 2012, in the carbon tax on other mineral oils. The carbon tax is increased from €15 to €20 per tonne of CO2.

There are reliefs including.

• Relief for duty on oils allowed  back into bonded warehouses
• heavy fuel oils for production of alumina and used in certain blast furnaces
• mineral oils for non-private sea navigation and sea fishing except in private pleasure craft
• certain fuels in air navigation excluding pleasure flying

Any person who produces, sells, delivers, or deals in mineral oil must be licensed.  The holder must have a tax clearance certificate

There are a range of offences for breaches of the legislation and controls. There are particular controls on marked diesel, which is charged at a lower rate.

Duties are paid under licences granted by the revenue under the legislation.  This is a flat rate registration charge and is additional for the substantive tax obligation.

Offences

It is an offence

• to contravene any provision of the legislation or any regulation
• To use as a propellant or sell or deliver, or keep  in a fuel tank any mineral oil  which is not taxed at the higher rate in respect of propellant
• To purchase or receive mineral oil for use as a propellant from a person who is not a holder of a licence
• To produce, sell, or deliver from any premises any mineral oil other than additives, any   chargeable mineral oil tax unless the person holds a licence
• Failure to display the licence
• Removing any mineral oil without consent or approval by the Revenue
• Tampering with any prescribed marker
• knowingly dealing in mineral oil from which any prescribed marker or substance has been removed
• Keeping prohibited goods at any lands or premises

In the case of certain offences, the vehicle concerned is liable to forfeiture.

Licence

A mineral oil trader licence holder or applicant must comply with excise law relating to the production, sale and delivery, keeping and delivery of mineral oil.

The legislation clarifies the grounds for refusal or revocation of a licence by the Revenue Commissioners.

Finance Act 2012

The Finance Act 2012 makes several amendments to Chapter 1 of Part 2 of the Finance Act 1999, which provides for the Mineral Oil Tax.

In the case of recycled mineral oil, the tax is chargeable at the appropriate rate in accordance with usage, and that liability is not confined, as at present, to such oil that is suitable for use as auto-fuel.

The provision for relief for mineral oil supplied to sea-going vessels is also amended, in accordance with agreed EU guidelines, to clarify that it does not apply to mineral oil used for industrial purposes on floating structures designed for such purposes.

Provision is made for relief from the carbon tax element of the MOT charge for mineral oil used for environmentally friendly heat and electricity cogeneration with output capacity equal to or greater than 50kWe. This relief, and the existing relief for mineral oil used in an installation covered by a greenhouse gas emissions trading permit, are made subject to conditions that may be set by Revenue.

There is a partial relief by repayment produced and purchased by qualifying road haulage and bus operators.  Finance Act 2013 number 2 provides that diesel must be purchased as above supply to the transport operator concerned or by means of a fuel carriage approved by revenue commissioners.  Purchases must be from a licensed mineral oil trader or delivered from another state in accordance with requirements.

A license for a mineral oil trader shall not be granted where there is a failure to comply with excise law by the applicant or where the defects in respect of the premises have not been remedied, or there has been a failure to comply with license conditions.

A person who supplies or delivers excisable products on which duty has been relieved or charged at a low rate is liable for any duty evaded where he knew or was reluctant/reckless as to whether or not the supply or delivery was connected to that evasion.  This is aimed at the problem with the supply and delivery of market gas oil for laundering.

Auto-Fuel Trader Licence

FA 12 extends the licensing requirements of section 101 of the Finance Act 1999, for any person who produces, sells, delivers or deals in auto-fuels (petrol and diesel), to persons engaged in similar dealing with the main ‘‘non-auto’’ fuels (marked gas oil and marked kerosene) and with aviation gasoline.

It provides for separate auto-fuel traders’ and marked fuel traders’ licences. A separate licence is r required for every premises or place at which the fuel concerned is produced, held or dealt in, and the licence must be clearly displayed at that premises or place.

All licences are subject to such conditions as Revenue may impose, and no licence may be issued to a person who does not hold a tax-clearance certificate or who has been convicted of an indictable tax offence.

A licence may be revoked where the licensee is guilty of any such offence, or for failure to satisfy the conditions imposed by Revenue. Provision is also made for Revenue to publish lists of persons who hold an auto-fuel trader’s licence or a marked fuel trader’s licence, and of the premises and places to which the licences relate.

There is  provision for forfeiture, in respect of any offence that relates to the sale, dealing in, or keeping for sale or delivery, of mineral oil at a premises or place, so that it applies, not just to the mineral oil concerned, but to all pumps and other equipment used for supplying the mineral oil concerned at that premises or place.

Finance Ac 2014-17

The Finance Act 2014 provides that Revenue Commissioners may defer payment of mineral oil tax to the 15th day of the following month.  This is subject to a ministerial order to commence the section.

The 2014 Act provides that mineral oil tax, including carbon tax, applies to natural gas and biogas and uses of vehicle fuel.  It provides for the supply and movement of gas as a transport fuel.  Producers and importers of vehicle gas must register with the Revenue.

There is provision for a carbon tax relief for the biogas elements of natural gas used in vehicles.  Rates for vehicle gas are provided for.  This is to be commenced by commencement notice by the Minister.

A mineral oil trader licence holder or applicant must comply with excise law relating to the production, sale and delivery, keeping and delivery of mineral oil.

The legislation clarifies the grounds of refusal or revocation of licence by the Revenue Commissioners.

The provisions in relation to mineral oil tax are amended by Finance Act 2017 to exclude a qualifying road transport operator, which is regarded as an undertaking in difficulty for the purposes of the European Commission guidelines on state aid,  for the purpose of eligibility for partial relief of mineral oils tax used in the course of business.

Finance Act 2019

Finance Act 2019 confirms the Budget increase in the carbon component of Mineral Oil Tax on mineral oils used as auto fuels from 9 October 2019, and provides for an increase, from 1 May 2020, in the carbon component of Mineral Oil Tax on non-auto fuels and vehicle gas. The carbon charge is increased from €20 to €26 per tonne of CO₂ emitted. The horticultural relief provision is also amended to apply the increase in the carbon component to heavy oil and liquid petroleum gas that is used for horticultural production.

Finance Act 2019 makes a number of amendments to Finance Act 1999 to bring national law concerning fuel used for private pleasure navigation in line with Council Directive 2003/96/EC of 27 October 2003, restructuring the Community framework for the taxation of energy products and electricity, and Council Directive 95/60/EC of 27 November 1995 on fiscal marking of gas oils and kerosene. The requirement to amend the relevant legislation has arisen from a ruling made by the Court of Justice of the European Union in October 2018.

The impact of these amendments will be the prohibition of the use of marked gas oil for private pleasure navigation starting 1 January 2020. In addition, the scope of certain offences and penalties, provided for in General Excise law (Finance Act 2001) and in Mineral Oil Tax law (Finance Act 1999), will be extended to cover fuel used for private pleasure navigation. The offences and penalties regime for the misuse of reduced rate marked gas oil in private pleasure craft will be aligned with the regime applying to road vehicles.

Finance Act 2019 amends section 99A of the Finance Act 1999. The amendment provides for an enhanced relief under the Diesel Rebate Scheme where the average price (exclusive of VAT) of gas oil purchased by a qualifying road transport operator is greater than €1,070 per 1,000 litres (€1.07 per litre). The maximum repayment under the scheme of €75 per 1,000 litres (€0.075 per litre) is unchanged.

This measure will apply to purchases of gas oil made by a qualifying road transport operator on or after 1 January 2020.

Finance Act 2019 amends section 78A of Chapter 1 of Part 2 of the Finance Act 2003 to provide for an increase to the production threshold for eligibility to claim 50 per cent relief from Alcohol Products Tax for beer brewed in small breweries. The production threshold is raised to 50,000 hectolitres per annum, relief is granted up to 30,000 hectolitres per annum.

Finance Acts 2020-21

Finance Act 2020 provides for ten annual increases to rates of the carbon component of mineral oil tax, including confirming the Budget increase in the rate of mineral oil tax on auto fuels from 14 October 2020. The rate increases are based on charging an additional €7.50 per tonne of carbon dioxide emissions each year for nine years and an additional €6.50 per tonne in the tenth year. From 1 May 2030, mineral oil tax rates will be based on charging €100 per tonne of carbon dioxide emissions.

Finance Act 2021  40 amends section 94 of Chapter 1 of Part 2 of Finance Act 1999 to provide for Northern Ireland road transport operators to continue to qualify for the Diesel Rebate Scheme as provided for in the Protocol on Ireland/Northern Ireland. The Act is further amended in section 99A to provide for a technical amendment to update a reference to relevant EU legislation regarding vehicle categorisation.

Finance Act 2022

Finance Act 2022  confirms the Budget changes to Mineral Oil Tax (MOT) rates to come into effect from 12 October 2022 and for further rate changes to come into effect from 1 March 2023.

The amendment provides for the extension of reductions in certain MOT rates, which were introduced earlier in 2022. Provision was made in Finance (Covid-19 and Miscellaneous Provisions) Act 2022 for these MOT rate reductions to be reversed from 12 October 2022. The reversal of these reductions was to be implemented from 1 March 2023.

Finance Act 2022  provides for increases in MOT rates, as set out in Schedule 2 of Finance Act 1999, on auto-fuels (light oils and heavy oils used as propellants, for air navigation or for private pleasure navigation), effective from 12 October 2022. These MOT rate changes arise from increases in carbon charge rates, as set out in Schedule 2A of Finance Act 1999, which came into effect on 12 October 2022.

Finance Act 2023

Finance Act 2022 amended the schedule of rates.

Finance Act No.2 2023 confirms the Budget changes to Schedule 2 of the Finance Act 1999 to provide for the extension of the temporary Mineral Oil Tax rate reductions on auto diesel, petrol and marked gas oil until 31 March 2024 with a phased restoration taking place in two stages on 1 April 2024 and 1 August 2024.

Petroleum Production Tax

Finance Act 2015 introduces a new regime for petroleum production tax. The tax has been applied since 2007 at rates from 0% to 15% of the field’s taxable income. It applies on a basis similar to corporation tax and is supplemental to corporation tax at the 15% rate.

The 2015 Act provides for petroleum production tax, which replaces profit resource rent tax in the case of licences granted after 18th June 2014. Petroleum production tax applies in addition to corporation tax, which is payable at 25%. It is deductible against profits of oil or gas activities.

It applies on a field-by-field basis and does not take into account allowances or losses on non-field-related activity. The tax is charged on the greater of 5% of the field less transportation cost, or it may rate it serving on a sliding scale between 10 and 40% on the basis of the scheme’s profitability. The profitability ratio is the cumulative gross revenue of each field divided by the cumulative cost of that same field for each period.

Where the factor is more than 4.5, the PPT applies to 5% of gross revenue minus transport costs or 40% of income. In the case of less than 1.5 it is 10% of net income. Between 1.5 and 4.5 it is based on a formula scale. PPT is allowed as a deduction in the computation of corporation tax.

Expenditure in respect of a taxable field may be surrendered to other group companies provided there is a 100% relationship.