excess profits tax

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excess profits tax,

levy on any profit above a standard level. Chiefly a wartime phenomenon, it is intended to increase revenue during periods of distress and to prevent businessmen from taking unfair advantage of the increased government spending and consumer demand that normally accompany wars. In 1917 the U.S. federal government adopted such a tax, which continued in various forms and at increasing rates until 1921. It was revived by federal legislation during World War II and during the Korean War. The tax was imposed on the excess over a firm's peacetime earnings or over an arbitrarily decreed earning rate. Great Britain levied an excess profits tax from 1915 to 1921, with a rate varying from 40% to 80%. During the era of World War II, Britain's excess profits tax was revived, with tax rates increased to 100%. Critics contend that such levies discourage productive enterprise by eliminating the profit motive.
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Astana has since 2010 put its PSAs with foreign companies under review and imposed the Excess Profit Tax (APT) system.
2bn ($28mn) were made for the corporate income tax and excess profit tax, resulting in a high effective income tax rate of 46% in 2Q12 (vs 33% in 1H11 and 27% in 1Q12).
The new structure includes an excess profit tax, and limits foreign participation to 50% in each offshore project with no guarantees of operatorship.
The Kyrgyz government plans to levy excess profit tax as part of its Safety and Decent Life Project, the Prime Minister said.
Governor Rendell would prefer that legislators enact an oil company excess profit tax, but he said he will consider other proposals to generate the funds necessary to ensure a safe and efficient transportation infrastructure that will serve future generations.
Excess profit tax is in addition to statutory income taxes, which are
Medvedev Unhappy with 60-66: Government Mulls Excess Profit Tax
for excess profit tax purposes in the following year.
Excess Profit Tax Could be Introduced for LUKOIL's Caspian Fields
Vedomosti reported today (26 Oct), citing LUKOIL's CEO Vagit Alekperov, that the Ministry of Finance is considering the introduction of an excess profit tax (EPT) for Caspian oilfields.
Having said all this, we note that patchy changes to the tax code could inhibit the chances of structural tax reform, in particular the idea of a greenfield excess profit tax, which was expected to replace MET for new projects.
Profit-based taxation for greenfield projects is likely to be introduced in 2014, implying replacement of the recently increased Mineral Extraction Tax (MET) with an excess profit tax at 27%.