Systems and Services that Optimize Organizational Results

By Jennifer Delony

The industrial internet of things is transforming the offshore oil and gas sector. One estimate claims that a typical offshore oil platform generates up to 2 terra bytes of data per day thats the equivalent of 1 million digital camera images.

Cisco, in its report A New Reality for Oil and Gas, said that, if oil and gas companies properly leverage the data they produce, they can capture $600 billion of value at stake through 2025. For a $50 billion oil and gas firm, that translates to an 11 percent bottom-line improvement, the report said.

That doesnt mean that offshore companies are all jumping on the big data bandwagon instead, theyre carefully evaluating the possibilities to understand what data, and the analysis of data, can do for their operations.

To get a glimpse into where the offshore sector is headed in terms of data and its applications, and what systems and services it is leveraging to get there, take a look at BP.

At the end of last year, BP announced it is working with GE on the deployment of a new integrated system called Plant Operations Advisor (POA). BP said that it started using POA to manage the performance of one platform in the Gulf of Mexico, and given success there, the company will deploy it to other BP facilities around the world this year.

According to BP, POA will help prevent unplanned downtime and improve facility reliability by helping engineering teams respond quickly to issues as they occur in real time.

The POA tool was built on GEs Predix operating system a software platform that is used to collect and analyze data from industrial machines. This cloud-based platform-as-a-service works at industrial scale for asset performance management (APM) by connecting machines, data and workers.

APM lies at the heart of this next-level digital system. It puts enterprise asset management software together with real-time information from production and data analysis and advanced analytics. In a nutshell, it allows companies to see their assets, make decisions to optimize those assets and optimize organizational results.

ARC Advisory Group, in a report on how APM overcomes challenges in oil and gas, said that currently too much time is dedicated to collecting, aggregating and analyzing available data, rather than converting it to meaningful business decisions. That is due to the application of data to disparate systems with no integration. APM alleviates these issues.

These solutions, based largely on todays increased connectivity, use of open standards, and increasingly more capable platforms for predictive and prescriptive analytics, enable oil and gas companies to move from largely re-active, conventional approaches for managing their critical production and automation assets to todays far more effective proactive and predictive approaches, the report said.

According to BP, the POA system rapidly integrates operational data from producing oil and gas facilities to deliver notifications and analytical reports to engineers so they can identify operational performance issues before they become significant. The system provides simplified access to a variety of live data feeds and includes visualization capabilities including a real-time facility threat display. It also incorporates an extensive case management capability to support learnings from prior operational issues.

GE plans to make this technology available to the entire oil and gas industry.

More Options

Offshore companies have also turned to OSI Softs PI System for collecting, analyzing and visualizing data for real-time management. The PI system allows a company to integrate whatever data they want, and create a customized display of that data.

According to Kevin Walsh, industry principal T&D, for OSI Soft, one of the strengths of PI is that it allows platform managers to perform predictive analytics.

He said that PI has different modules that allow for the input of mini-analytic calculations based on certain attributes or time frames to create an operational band. If operations go outside of that band for example, plus or minus 1 percent for more than three minutes in a row, PI notifies managers that an alarm-level event is immanent. This feature gives managers a visual on possible problems before they happen a huge advancement in data functionality.

Srikanta Mishra, Ph.D., Institute Fellow and chief scientist for energy at nonprofit Battelle, says his organization offers analytics to the oil and gas sector under its Elucidata service.

Offshore companies have been slow to engage with their data at the level offered by Battelle, but Mishra says they are interested.

According to Mishra, the Elucidata service is an umbrella for a process that Battelle provides to integrate data from multiple sources.

The task that Battelle undertakes is intended to bring all of this data into one easy-to-use platform that can then be utilized for knowledge and discovery, he said. The idea here is to learn from the data and then use that to make decisions.

Under the knowledge discovery component of Elucidata, Battelle offers clients a combination of advanced statistical capabilities and in-house subject matter expertise.

In addition, Mishra said that Battelle captures information from the knowledge discovery component in customized software solutions and user interfaces that makes it easy for managers and decision makers and, on the platform, operators, to make decisions that are based on what has happened in the past, and from which robust insights can be derived.

In the offshore environment you might say that there are two discriminating factors one is the situation with respect to automation; a very high level of automation is becoming more and more commonplace, Mishra said. The second is the data that we get from offshore environments is really big data in the sense that we get lots of data we get very frequently sampled data so the challenge is how do you process this information in real time, as opposed to doing it offline, and make decisions with respect to the behavior of your system in the near future?

He said that, for example, a company might monitor pressure and temperatures and flow rates, and seek to understand, given the kind of conditions, what the pressure is going to be in the next hour, the next 24 hours, and whether its going to trigger some danger threshold that needs to be mitigated.

In terms of predictive maintenance, Mishra said, the organization can look at the past history of failures and near failures and correlate them with other indicators of the system, with respect to pressure or temperature, for example. With that information, its possible to establish a trigger system, so that if the system crosses X value of pressure and Y value of temperature, certain equipment is likely to undergo failure because it has failed in the past under these kinds of conditions.

The challenges are really in how do you take this massive amount of data and then process them in a real-time or near real-time environment, he said. And after you go through the knowledge discovery part, having gone through the data acquisition and management part, how do you capture that learning, and those insights, into some sort of a decision support interface that can be used by the operator on the platform or somebody who is sitting in a control room in onshore office?

Whats Next?

ABS Groups Matt Mowrer, director of applied technology and data analytics, says that there are many applications for business analytics coming in the near future.

Mowrer said that the next step beyond predictive analytics is prescriptive analytics.

I really see that working on the risk side, where Im not just providing alarms to operators about anomalous conditions based on multiple data feeds, but actually giving them the recommended action to minimize the time it takes them to make the decision and also hopefully eliminate bad decisions, he said.

Also down the road, Mowrer sees the possibilities for the development of augmented reality for operations and maintenance workers, where they are in the physical environment and they have access to a virtual environment.

He said that, from a wearable technology perspective, such as Google glass, operations and maintenance workers can access maintenance procedures, and have an interface where they interact with equipment to minimize time spent troubleshooting or identifying tools and procedures.

Youre seeing these things on the consumer side, and I think theres some natural industrial applications for them, he said.

Read more:

Advancing Data Functionality for Offshore - #OILMANNEWS (blog)

24/7 Wall St.

AT&T to Bring Back 3000 Offshore Jobs 24/7 Wall St. AT&T Inc. (NYSE: T) has reached a tentative settlement with the Communications Workers of America over the 20,000 people the telecom employs in its Southwest region. Among the concessions AT&T made was that it would bring back 3,000 jobs, most are ... and more »

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AT&T to Bring Back 3000 Offshore Jobs - 24/7 Wall St.

Once a scenario has been simulated, contractors can project the right cost, depreciation and value in an upcoming contract before the rig move process begins. Being able to see the impact of moving a rig from one company to another is a benefit of accurate forecasting you get from a single end-to-end, fully integrated solution. The ability to forecast in this manner saves time and money for drilling contractors, critical in the oil and gas industry - now more than ever.

Once a rig move has begun, drilling contractors require visibility over vast data sets - accounting currencies, work orders, maintenance transactions and more. During the move, management also need to monitor the environmental impact, cost of operations, support for quality assurance and health & safety management.

Unfortunately, many drilling contractors still struggle with their disjointed and unintegrated solutions. None of their existing systems are comprehensive or agile enough to fully map the diverse requirements, processes and extra transactions required on a rig during a move. By bringing together all these data streams into a single solution, drilling contractors can reap the benefits of analyzing large amounts of real-time information - presenting an accurate picture of events and enabling well-informed decision making during the move.

Having access to a rigs complete maintenance history in one solution enables traceability, but also guarantees compliance. The global oil and gas environment demands a solution which can quickly adapt to compliance regulations to reduce non-compliance risk. Rig move solutions must enable full visibility into IFRS, US GAAP and SOX compliance as well as efficient risk management and environmental impact. Because the United Nations Convention on the Law of the Sea has divided the sea into zones with different legal status and applicable law, and other rules may apply in territorial waters within 12 nautical miles of a coast, rigs crossing these jurisdictions may need to conform to different rules. Rig move must also take into account differing regulations for the asset itself, including the number of lifeboats, fire and gas detection systems, number of individuals allowed to sleep in a single cabin and other criteria.

From beginning to end, manual transactions pose significant risk to rig moves - causing inaccuracy, delays and spiralling costs. If a drilling contractor begins a rig move with fragmented systems, there is a risk the finance department will see an inaccurate picture of how the move has taken place.

Fragmented systems handling rig move processes may mean it takes the finance department months to recognize a rig has been moved to a new location. This lack of visibility and delay of information sharing significantly hinders operations, while backtracking to correct data creates unnecessary overhead costs. A solution lacking in integration may also result in rigs are moved from one locale to the next without being reconfigured to account for different regulatory regimes, placing the organization at risk of fines and recertification.

The right enterprise software can extract necessary data and then alert users of what objects need to be cancelled, closed and/or transferred from projects to conduct compliant and well-documented rig moves. This functionality enables a much more cohesive transfer of data, improves documentation for finance, optimizes processes and reduces error postings, manual corrections and overall transactions.

Real-time visibility, optimized solution processes and accurate forecasting bring real value to drilling contractors during mission-critical rig moves. These benefits directly contribute to industry efforts to reduce overheads and cut unnecessary costs.

For some organizations, adapting to the challenges of a rig move in the transforming oil and gas market may be intimidating. With the support of solutions designed to maximize operations, compliance and the bottom line, offshore drillers can make inefficient rig moves a thing of the past.

Patrick Zirnhelt is aVice President with heavy involvement in Enterprise Service & Asset Management at IFS North America.

Read the original post:

Time For Change: Meeting The Challenge Of Offshore Rig Moves - Manufacturing.net (blog)

Helicopter Lessor Waypoint Sees Offshore Sector Bouncing Back Aviation International News Rotorcraft leasing group Waypoint sees improved demand from the offshore oil-and-gas-support sector, which has been a weak point in the helicopter market for the past three or four years. According to Waypoint CEO Ed Washecka, business confidence in ... and more »

Originally posted here:

Helicopter Lessor Waypoint Sees Offshore Sector Bouncing Back - Aviation International News

New York Times

US Agents Raid Caterpillar Over Offshore Tax Practices New York Times Federal agents raided three Caterpillar buildings near its Illinois headquarters on Thursday, company and law enforcement officials said, in an escalation of an inquiry into the heavy equipment manufacturer's offshore tax practices. Caterpillar has ... Caterpillar Offshore Tax Practices Illegal, FBI Raids Chicago, Illinois HeadquartersiMotorTimes.com all 228 news articles »

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US Agents Raid Caterpillar Over Offshore Tax Practices - New York Times

Reacting to a CBC/Radio-Canada investigation into offshore tax dodges, Prime Minister Justin Trudeau has vowed to do a "better job of getting tax avoiders and tax frauders."

The fifth estate, in a joint investigation with Radio-Canada's Enqute, revealed the names of several wealthy Canadians who appear to be linked to shell companies set up by KPMG in the tiny tax haven of the Isle of Man.

Canadians who bought into the tax scheme declared they were "gifting" their money to an offshore jurisdiction. The money would be invested and any returns would be "gifted" back. Because these returns were so-called gifts, it would all be tax-free.

KPMG has consistently insisted that this "Offshore Company Structure," as they called it, complied with Canadian laws

Documents obtained by the fifth estate and Enqute show 21 "high net worth" Canadian families signed up for the massive tax dodge from 1999 until 2012 when it was first detected by CRA auditors.

During an event in Vancouver on Friday, Trudeau was asked if he would reopen a parliamentary finance committee's inquiry into the KPMG scheme "inlight of these new allegations."

The prime minister avoided referencing KPMG directly, saying "it is absolutely unacceptable that there be people not paying their fair share of taxes."

Prime Minister Justin Trudeau, shown in Vancouver on Friday, says his government has put $440 million into the Canada Revenue Agency to 'to ensure we are doing a better job of going out and getting tax avoiders and tax frauders.' (Jonathan Hayward/The Canadian Press)

Trudeau said his government has put $440 million into the Canada Revenue Agency to "to ensure we are doing a better job of going out and getting tax avoiders and tax frauders."

"That's something we're going to continue to do," he said. "We know that there is always more work to do, but it's something we continue to take very, very seriously.

"We know Canadians want to make sure that people are paying their fair share of taxes."

Meanwhile, the NDP is calling for an investigation to uncover the full extent of the KPMG affair.

"The Liberal government must conduct a thorough investigation into this scheme and commit to ending these secret, penalty-free amnesty deals for tax evaders," said Pierre-Luc Dusseault, the party's revenue and finance critic.

The KPMG tax dodge first stirred controversy last spring when CBC revealed that the CRA offered a secret sweetheart deal in effect, an amnesty to the accounting firm's clients who had been caught using the scheme.

The offer granted KPMG clients "no penalties" provided they paid back taxes and modest interest.

But Revenue Minister Diane Lebouthillier insisted Friday that legal proceedings have not been abandoned against any clients who used the KPMG scheme, which the CRA has described as a "sham."

"I insist there was no amnesty and there will not be an amnesty," she said.

Excerpt from:

KPMG offshore tax dodge: Trudeau vows to do 'better job' with tax avoiders - CBC.ca

The New Zealand Government is moving to close loopholes preventing large multinationals from claiming tax breaks which costs the country about $300million a year.

At the International Fiscal Association Conference in Queenstown yesterday, Revenue Minister Judith Collins announced the release of three base erosion and profit-sharing (BEPS) consultation documents, aimed at strengthening New Zealands rules for taxing large offshore companies with a presence in New Zealand.

BEPS is a tax avoidance strategy used by multinationals, where profits are shifted from jurisdictions with high taxes, for example the United States, to jurisdictions which had low taxes, or so-called tax havens.

Mrs Collins told the Otago Daily Times yesterday the new measures were about fairness.

"One of the things that happens is that if youre an offshore company with an office in New Zealand ... they load on to the New Zealand company a lot of the cost of head office or ... they charge the New Zealand office for things, like very high interest rates," she said.

"They put a lot on the business in New Zealand.

"Profits they make in New Zealand are significantly reduced for tax purposes [and] profit is shifted offshore.

"Certainly, an amount of manipulation is allowed [but] were closing that loophole. Its just about fairness.Salary earners dont get a chance to do that, so why should anyone else?"

Included in the proposals was a new anti-avoidance rule to apply to large multinationals which structured to avoid having a permanent taxable, presence in New Zealand.

A large multinational is considered a company with a global turnover of more than 750million ($NZ1.21billion).

There were also plans to update existing transfer pricing legislation to align with OECDs new guidelines and Australias rules, as well as several administrative measures aimed at helping Inland Revenue (IRD) assess and collect the right amount of tax.

Those measures would generally only apply to large multinationals which refused to co-operate with the IRD and would make it possible for IRD to assess the companies based on the information the department has at the time.

That would also require tax to be paid earlier in the disputes process and allow IRD to collect relevant information held offshore.

"The proposed measures will also contain remedies for Inland Revenue where the non-resident does not co-operate, such as increased penalties and a power to allocate income to New Zealand in the absence of information to the contrary," Mrs Collins said.

"If the IRD does its job properly, we have money for hospitals ... schools ... the things people expect [the] Government to provide."

New Zealand was not trying to be a world leader with the "quite strong, but measured" proposals.

"Were a very open economy, we rely on exports to survive, we need foreign capital as well.

"We need to not send out a message [that] we dont want multinationals.

"Were happy to have you as long as you pay your fair share of New Zealand-earned tax.

"Just because were nice, friendly little Kiwis, were not stupid."

She expected legislation to be shored up and coming to parliament by mid-year once it became law it would be much more difficult for multinationals to find loopholes.

"Whatever measures we put in place there will be some very clever people in the world who will be hell-bent to get around this."

tracey.roxburgh@odt.co.nz

Three consultation papers proposing new measures to strengthen New Zealands rules for taxing large multinationals were released yesterday.

They contain proposals for:

Tackling concerns about multinationals booking profits from their New Zealand sales offshore, even though their sales are driven by New Zealand staff.

Preventing multinationals using interest payments to shift profits offshore.

Implementing New Zealands entrance into an international convention for aligning our double tax agreements with OECD recommendations.

Submissions on the implementing the international convention are open until April 7, and submissions on the other two documents are open until April 18. Ministers will consider final proposals later this year.

Read the rest here:

Offshore tax loophole to be closed - Otago Daily Times

Forbes

You Can't Have Offshore Wind Power Without Oil Forbes The Block Island Wind farm's launch late last year signified the United States' official entry into the offshore wind industry. And while European countries have been generating electricity by spinning turbines offshore since 1991, the US is eager to ... OC offshore meteorological tower step toward wind farmDelmarva Daily Times Regulators Updated on 1st US Offshore Wind Farm OperationsU.S. News & World Report all 9 news articles »

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You Can't Have Offshore Wind Power Without Oil - Forbes

3/3/2017

STAVANGER, Norway -- Repsol Norge AS is the operator for production license 705 in the Norwegian Sea.

The Petroleum Safety Authority Norway (PSA) has given Repsol consent to drill exploration well 6705/7-1 in a prospect named Stordal.

The well's geographical coordinates will be:

67 15' 05.14" N 05 10' 29.12" E

The drilling site is in the deep-water section of the Norwegian Sea, around 395 km west of Bod. Water depth at the site is 1,410 m.

Drilling is scheduled to start in early March and to last 33 days, or 48 days if a discovery is made.

The well is to be drilled by Transocean Spitsbergen, which is a semisubmersible drilling facility of the Aker H-6e type, owned and operated by Transocean Offshore Ltd. It was built at the Aker Stord yard in 2009, is registered in the Marshall Islands and classified by DNV GL. Transocean Spitsbergen received a new Acknowledgement of Compliance from the PSA in November 2012 following a change of ownership.

See the article here:

Repsol receives consent for exploration drilling offshore Norway - WorldOil (subscription)

A former client of the accounting giant KPMG says a tax dodge that involved wealthy people gifting their money to an offshore jurisdiction was a "facade" designed to hide money from the taxman.

The client, who spoke to CBC's the fifth estate and Radio-Canada's Enqute on the condition of anonymity, says KPMG made him sign a confidentiality agreement that prevents him from speaking publicly about the tax dodge.

In an exclusive interview to be aired Friday on the fifth estate documentary "The Untouchables," the former client says KPMG insisted on secrecy when it was promoting the tax avoidance scheme to wealthy Canadians as far back as 1999.

Documents obtained by the fifth estate and Enqute show 21 "high net worth" Canadian families signed up for the massive tax dodge from 1999 until 2012 when it was first detected by CRA auditors a scheme that deprived the federal treasury of tens of millions.

The KPMG tax dodge stirred controversy last spring when it was revealed the Canada Revenue Agency offered a secret amnesty to the accounting firm's clients who had been caught using the scheme.

The amnesty offer, leaked to CBC News in a brown envelope, granted KPMG clients "no penalties" as long as they paid back taxes and modest interest.

As a condition of the May 2015 amnesty offer, the CRA itself demanded that KPMG clients not talk about it in public.

Until now, no KPMG client has spoken out about their role in the scheme.

The client says the tax dodge was based on a simple if fictitious idea that "high net worth" clients give away their fortunes to an Isle of Man shell company. The money would be invested offshore and would be returned back to Canada, again untaxed, also as a so-called gift.

"So basically, I escaped the entire tax circle," the ex-client said.

Today, the client, who paid KPMG $100,000 to set up the Isle of Man tax dodge, says the "gift" was pure "fiction" and that, in reality, he never gave anything away.

"I still have absolute control over my money," he said. "The rest was just a facade... Everything else, every bit of piece of paper, everything is window dressing to create the appearance of 'I don't have control over this,' but in fact I do."

He says KPMG told those involved to keep quiet about their involvement.

"They're just going to keep their lips shut tight," he said. "How's Canada Revenue Agency going to detect it?"

In a written statement to the fifth estate, KPMG says it "emphatically" disputes the ex-client's claim.

KPMG says its offshore structure complied with "all laws" in Canada and was carefully reviewed by senior executives at the firm before it went ahead.

"Clients were explicitly told that they were giving up control of the assets," KPMG said. "To our knowledge, no member of KPMG would or did provide any advice or instruction to the contrary."

As a condition of the May 2015 amnesty offer, the Canada Revenue Agency demanded that KPMG clients not talk about it in public. (Sean Kilpatrick/Canadian Press)

Still, the former client insists that's exactly what he was told, in private.

"Nobody gives away $20 million to an Isle of Man company and says: 'Hey, I busted my ass for 20 years to make it, but you know what, I'm feeling generous today so you can have it all, no strings attached.' I don't think so, not for a 100 grand cheque that you just wrote to KPMG."

In court documents, the Canada Revenue Agency has also alleged that the KPMG scheme was a "sham" that "intended to deceive" the federal treasury.

the fifth estate/Enqute investigation also looks at how much money KPMG made from its tax scheme.

The accounting giant is coming under scrutiny for its testimony before the House of Commons finance committee last spring.

The committee, which had begun a probe into why the CRA offered amnesty to those wealthy clients, called KPMG's former global head of tax, Gregory Wiebe, as its first witness.

Gregory Wiebe, former global head of tax for KPMG, testified at the House of Commons finance committee there were 16 'implementations' of the scheme. (Parliament of Canada)

MPs wanted to know exactly how much money KPMG itself made from running the offshore tax dodge.

Wiebe testified that the "total revenue" that KPMG received from the tax scheme was a $100,000 start up fee for each client.

"It was a fixed fee per implementation, it was not a contingent fee or whatever," Wiebe told MPs.

In other words, the firm did not earn fees based on the taxes dodged by their clients.

However, new records in a Vancouver court action appear to show KPMG made far more money off the scheme than they told the House of Commons committee.

Documents filed in the Tax Court of Canada in January show that one wealthy family stated they paid a yearly fee to KPMG "based on" their "annual tax savings."

In that one case alone,KPMGearned additional annual payments that totalled $300,000 over several years,according to the documents.

In a statement to CBC News, KPMG says those court documents filed in the Vancouver tax court case contain unproven court allegations.

"[KPMG] provided accurate information to the finance committee on this point and on all other points in his testimony."

KPMG may also have understated the number of offshore companies it set up for Canadian multimillionaires and billionaires, according to the fifth estate/Enqute investigation.

Wiebe testified at the finance committee there were 16 "implementations" of the scheme.

However, using search techniques the fifth estate and Enqute developed using the Isle of Man's public registry, journalists found five additional structures set up for wealthy Canadian families.

KPMG now says it did create those five structures, but didn't mention those numbers to the finance committee because those clients "aborted" their involvement in the scheme before they dodged any taxes.

Sherbrooke University tax Prof. MarwahRizqy says KPMG should have included those additional Canadian families in its totals to the finance committee and to the Canada Revenue Agency.

"It's very important to disclose that type of information," Rizqy said. "Here we're talking about a tax structure, about the intention to evade tax. The CRA can go and investigate these families and see if they actually did something else."

Marwah Rizqy, a tax professor at Sherbrooke University, says KPMG should have disclosed the five additional tax structures to authorities. (CBC)

Rizqy says KPMG's testimony before the committee is concerning.

"There's a lack of credibility here," Rizqy said. "They misled the Parliament, they also misled Canadians."

The inquiry was abruptly halted last June after KPMG lawyers sent a letter to MPs on the finance committee.

Lawyers for the accounting firm complained that it would be "fundamentally unfair and improper" for the inquiry to hear from tax experts critical of the offshore scheme amid ongoing court cases.

Critics pointed out that KPMG only sent the letter to the finance committee after its former head of global tax, Wiebe, had already given his side of the story.

Rizqy, who has reviewed internal KPMG and other court documents in the Isle of Man scheme, questions why the federal government continues to do business with KPMG in light of the revelations.

The firm was brought in to audit the F-35 fighter jet spending, as well as Senate travel expenses, for example.

In 2016, the federal government gave KPMG at least $9 million in contracts, according to Public Services and Procurement Canada. During the previousgovernment, KPMG was given more than $80 million in government contracts.

"It doesn't make any sense," Rizqy said. "I mean if on one hand we know that you're promoting tax shelters, you should be banned to be part of any public contract. I think it's the time to ask KPMG to step aside from every public contract."

Rizqy who is in the running to be a candidate for the Liberal Party in an upcoming federal byelection in Quebec does not shy away from criticizing Ottawa's handling of the KPMG affair.

She is recommending the Liberal government call a full-scale inquiry into the KPMG revelations, including the secret amnesty deal it negotiated with the CRA for its wealthy clients.

"I think this is the time to conduct a real investigation about KPMG, about the deal, about the tax structure."

Link:

KPMG offshore tax dodge a 'facade' designed to hide money, ex-client says - CBC.ca

Forbes

You Can't Have Offshore Wind Power Without Petroleum Forbes The Block Island Wind farm's launch late last year signified the United States' official entry into the offshore wind industry. And while European countries have been generating electricity by spinning turbines offshore since 1991, the US is eager to ... Regulators updated on 1st US offshore wind farm operationsWPRI 12 Eyewitness News OC offshore meteorological tower step toward wind farmDelmarva Daily Times all 9 news articles »

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You Can't Have Offshore Wind Power Without Petroleum - Forbes

Just when wealthy South Africans thought theyd absorbed all the blows, hidden in the fine print of SAs Budget 2017 was a bombshell that is about to hit creators of offshore trusts really hard. BDOs David Warneke explains the SARS version of a poison pill which adds significantly to the risks of those who are involved with offshore trusts. And it goes way beyond the recent legislation on transfer pricing. Alec Hogg

This special podcast is brought to you by BDO, whose David Warneke joins us now on the line from Cape Town. David, good to talk to you. There was a lot in the budget for people like yourself to digest, but one of the shocks you wrote on BizNews this week was the taxation of offshore trusts. Now, how prevalent are offshore trusts among South Africans?

I think its fair to say that a lot of wealthy South Africans have offshore trusts. I dont have an exact number for you, but I think it is quite prevalent within South Africa, thats my impression, not nearly as prevalent (I dare say) as local trusts, but certainly, there are a good number of wealthy South African families that have offshore trusts.

What would the incentive be to have a structure like that?

Its quite a good question, actually, because its not as straight-forward as it seems from the point of view that its not simply a question of that a South African residents can set up an offshore trust in a place like Mauritius or wherever it is, which would then hold shares in a company (typically, thats the way that the structure works) and do investments through the company. The basic tax problem that arises, (which I dont know if anybody out there appreciates), is that we have transfer pricing legislation in our Income Tax Act. In other words, the way of transferring those assets into a trust would typically be by way of the offshore allowances, assuming it was all done legally (and hopefully, it is), would be by way of using the offshore investment allowance.

Then the question is how do you divest yourself of the money that youre putting into the trust and normally what happens then is people dont donate it to those trusts because there is a donations tax implication. Normally what happens is that they make a loan, they advance a loan to the trust. Usually they end up being connected persons in relation to the trust from an income tax point of view. Thats where the problem comes in because youve got this Transfer Pricing Legislation that says if you have a transaction between a resident and a non-resident, you are connected personally with the sign in the Act, in relation to one another, that the transaction must be on arms length terms and conditions and if its not, then its deemed to be an arms length terms and conditions.

In this type of situation the trick is really that loan thats made interest-free is actually deemed to be interest bearing as an arms length interest rate and that interest is supposed to then be declared by the South African lender in their tax return. Thats the problem and I think what often has happened is that people dont know about that or they conveniently overlook it and therefore, that interest ends up not being charged, which would obviously undermine the tax effectiveness of the whole scheme.

David, just so that I can understand it, maybe from a practical perspective, if as a wealthy South African you have an offshore trust and you get all the approvals from the exchange control for R10m for arguments sake and that trust then invests in equities in other parts of the world, at this point, is it necessary to charge interest or for that trust to pay interest to the South African taxpayer who has actually set it up?

Yes, provided that the taxpayer or that person that set it up or any of his relatives or any connected person in relation to him is a beneficiary of the trust, which invariably is the case because one would set it up such that your immediate family would be discretionary beneficiaries usually, of such a trust. In that case, they are connected persons, the trust is connected in relation to you, or the person setting it up and therefore, if lower than an arms length interest rate is charged on the loan and if the money does go in as a loan as opposed to a donation, for example, then the interest is deemed to accrue to you, whether youve charged it or not, an arms length rate of interest.

How high is that, what rate of interest is that?

The enquiry would really be, at what rate could the trust have borrowed from an external, unconnected third party such as the bank, for example, on the strength of this balance sheet and that would then be the rate.

The fact being that most people, I guess would not be charging the trust interest, because they dont want to increase their tax liability, but they could be fined for that emission in future or now.

That is the problem with that and yes, I think many people, as I say, dont realise that that provision is listed and they just dont charge interest and they go about their business, but actually theres definitely a tax issue there.

What else was there in this budget that would worry you about offshore trusts?

In this particular budget, if you look at the statement made regarding offshore trusts, it was particularly that structure that Ive just described now, where you have an offshore trust which holds shares in an offshore company. For example, lets just use Mauritius again as an example, we have a trust set up there and we have a company set up there and the trust holds all the shares in that company and South African residents have set that trust up with that structure. The announcement that was made, was not entirely clear, but what it seems to be saying is that there is going to be an attempt to deem the company that is held by the trusts to be whats called a controlled foreign company from the South African tax point of view.

Basically with the controlled foreign company then, in proportion to whatever their participation rights are in the company, South African residents would have to include the net income of that underlying company in their own income tax returns, almost as if they held the shares in that company directly and you were looking straight through the company at whatever its underlying income was. So, its difficult to see how thats practically going to work because obviously those individuals who might have set that structure up, dont actually hold the shares in the company, the offshore trust holds the shares in the company.

In what proportion, if you have, lets say, four or five beneficiaries of that offshore trust to South Africa, does one then just say, Well, 25 percent of that is deemed to an individual ones income, 25 individual two, three, four, or is one just looking at the founder of that trust including 100 percent of the underlying company in that persons income? Its really not clear how that would be brought about.

What does seem to be clear is that the advantage that an offshore trust might have had is now being eliminated. Are there still any advantages in having this structure if these proposals go ahead?

Yes it might work for somebody who went overseas, worked overseas for a number of years, and wasnt for a while a South African tax resident, then came back into South Africa, but before they came back they set the structure up. Possibly it might work for them. I think transfer pricing, in any case, would be a problem. I think even there, if theres a loan outstanding between a South African resident and a non-resident, one could argue that the transfer pricing provisions would still deem a market-related interest rate to apply. I think that if SARS were to work with the provisions in the Act that are already there, namely the Transfer Pricing Provisions, I think thats the main one in Section 7.8, if they were to work with those, theres actually enough to make foreign trust arrangements, certainly on the whole, not beneficial from a South African tax point of view.

Read also:Reasons to be afraid very afraid if youre hiding money offshore: MPs warn South Africans

Alec, I might just add, sometimes what people do is that loan to the trust, they denominate it in a hard currency, where the rates of interest then are argued to be very low, in other words, an arms length, its an interest on a US Dollar denominated loan between the South African resident and an offshore trust might carry a fractional, a very low rate of interest so that the transfer pricing provisions at the moment, one might think that its still worth having that structure and suffering the tax on that rate of interest when you convert it back into Rands because its quite low to begin with, but one must also remember that over the time, the rates of interest are subject to fluctuation obviously, they might well go up. Theyre low at the moment, but theyre unlikely to always be that.

Also then by having that loan denominated in hard currency, ones actually creating a future estate duty problem because that loan is an asset in that lenders estate for estate duty purposes and one would then have to convert that on their death back into Rands for purposes of calculation of estate duty, which then might make the estate duty liability worse down the line by having it in hard currency.

Whats the motivation behind all of this? Its pretty complex stuff, but where are the tax authorities, whats driving their intention?

Well, I think that tax authorities worldwide have been taking aim at offshore trusts. We have that situation in Europe, in America, and in Canada. They just dont like residents to be beneficiaries or participants in offshore trust arrangements, I think largely because despite having transfer pricing and other legislation in place, what they have found is that people simply arent compliant with that legislation and historically its been difficult to get information on those offshore trusts, so that if people dont declare those interests in the offshore trusts then the revenue authorities are none-the-wiser.

Historically, thats been the case. Of course, now with the common reporting standards coming into play and worldwide transparency being enhanced, information sharing between revenue authorities and so on, I think that those days are largely over, but I think that its fair to say that its not just a South African peculiarity, I think largely offshore jurisdictions as well, take a dim view of trusts in the developed world.

Your advice to someone who does have an offshore trust, get some expert consultancy quick.

Well, for sure, yes, one does need to review that. One of the recommendations of the Davis Tax Committee as well, in their final report on the state duty, which also included trusts, was that SARS should very comprehensively investigate all offshore trust arrangements and I think that the reasoning behind that is that if one digs down into it, you might well find that its not properly set up. For example, one of the issues is that for the offshore trust arrangements to have any benefits at all, it would have to be a non- South African tax resident trust to begin with. For example, the usual thing is that you have an offshore trust company doing the management of the trust and you have trustees who are all offshore, you might have a South African one.

The problem though is, from an income tax point of view, our definition of resident in the case of a trust would be basically, if the effective management of that trust is offshore as opposed to in South Africa. Then what would happen would be that one would have to look at where are the actual decisions regarding largely the strategic management of the trust are actually formulated, are they formulated offshore or are they formulated onshore and one might well find that although one almost has the veneer of these offshore trustees taking the decisions and minuting them and all the rest of it, that the actual underlying decisions are really made by the founder here in South Africa who just tells them basically what to do, in which case the trace of effective management of that trust is actually South Africa, which means that the offshore trust is actually a South African resident trust thats, for tax purposes, not actually a non-resident to begin with.

So yes, I do agree with you. I think that people with those structures really need to have them reviewed as a matter of urgency to make sure that all the boxes are ticked and in terms of what they perceive the arrangement to be, that that does in fact hold water to begin with and then following on from that, even if the arrangement is what its purported to be, what are really the South African tax consequences of those arrangements, taking into account the transfer pricing provisions in Section 7.8, deemed income provisions and the other provisions in our Income Tax Act.

Well, not a very good budget for those who hold offshore trusts, David Warneke informing us there and this special podcast was brought to you by BDO.

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David Warneke: Own an offshore trust? After Budget 2017 get advice quick or pay big fines - BizNews

March 2nd, 2017 Grant Rowles Asia, Offshore 0 comments

Australias MMA Offshore, which just reported a A$324 million ($248m) loss for the first half of its financial year, has announced the sale of its Dampier and Broome Supply Bases to Japanese-owned Toll Group.

MMA said it will realise around A$44.1 million ($33.8m) from the sale of the Dampier Supply Base asset and A$8.7 million ($6.7m) from its 50% interest in the Toll Mermaid Logistics Broome Supply Base. Net proceeds from the transactions will be applied to debt reduction.

As part of the agreement, MMA will continue to operate the Dampier Slipway facility for at least 12 months under a service agreement, and it will continue to serve as a vessel maintenance and repair facility for MMAs Australian fleet as well as third party vessel operators in the region.

Tony Howarth, chairman of MMA Offshore, said: The sale of the Supply Base assets marks a significant step in the strategic repositioning of MMAs asset portfolio and is supported by the Companys Banking Syndicate.

Historically the Supply Base assets were a significant contributor to the earnings of our predominantly Australian focussed operations. However, in recent years the Supply Base business has become less significant as the Company has focused its strategy on its Australian and international offshore vessel operations.

The sale is part of MMAs strategy to rationalise non-core assets and reduce debt, which Howarth says will better position the companyto take advantage of improved oil and gas market conditions when they occur.

The Dampier Supply Base sale is expected to complete by June 2017, while the Broome Supply Base sale should be completed by April 2017. The deals are subject to regulatory approval.

Grant Rowles

Grant spent nine years at Informa Group based in London, Sydney, Hong Kong and Singapore. He gained strong management experience in publishing, conferences and awards schemes in the shipping and legal areas, working on a number of titles including Lloyd's List. In 2009 Grant joined Seatrade responsible for the commercial development of Seatrades Asia products. In 2012, with Sam Chambers, he co-founded Asia Shipping Media.

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MMA Offshore offloads supply bases to Toll Group - Splash 247

When it comes to renewable energy, theres a new kid on the block and hes making lots of new friends quickly. Were talking of course, aboutoffshore wind. While once resisted as too expensive and too unsightly, the technology finally has found its sea legs and is really making a splash.

Europe is where most of the activity has been. It started withVindeby, the worlds first offshore wind farm, off the Danish coast. Vindeby, commissioned in 1991, has 11 turbines, with a combined capacity of 4.95 MW.

Thats significantly less than the output of just one of 32 8 MW turbines that Danish-based Dong Energy is installing at theBurbo Bank Extension (PDF)wind farm off the English west coast near Liverpool. Dong, which also operates Vindeby, has 3,000 MW of offshore wind online, and plans to grow that to 6,500 MW by 2020. Their 21 existing facilities are off the coasts of Denmark, the Netherlands and the U.K. Dong, which both builds and operates these wind farms, is one of a growing number of players in this market.

Better known perhaps, are the turbine manufacturers.Vestas, the Danish turbine maker, has formed a joint venture withMitsubishi Heavy Industriesof Japan, to compete withSiemens, the longstanding frontrunner.General Electricis getting into the game as well, along with a number of Chinese manufacturers.

Here are some reasons why offshore wind makes sense. First, it overcomes most of the not-in-my-back-yard (NIMBY) concerns about visual pollution and noise, although there has been resistance from certain upscale seaside communities, notably theCape Windproject in Nantucket Sound, and Donald Trumps lawsuit attempting to block a wind farm off the coast of Scotland, near a golf course he owns. (AlthoughTrump lost, Cape Wind is apparently "dead in the water.")

Winds at sea blow more consistently and with less obstruction than winds traveling across the land.

Second, wind speeds increase the higher you get off the ground. For that reason, larger turbines, with blades that reach hundreds of feet into the air, capture more energy than smaller turbines. This factor also combines with the previous one, as the larger the turbines, the more objectionable they tend to be. This is not an issue when they are far out at sea. (Of course, they generally arent that far out because its easier to plant them in shallow waters, not to mention the length of undersea cable required.) Also, a substantial portion of most countries' population lives near the sea.

Finally,winds at seablow more consistently and with less obstruction than winds traveling across the land. Thats why hurricanes lose strength when they make landfall.

Still, until recently, costs were too high, and there was plenty of low-hanging fruit with less costly land-based turbines.

But as builders have come up the learning curve on how to anchor the turbines to the seabed more cost-effectively, and manufacturers have come out with new turbines that are both larger and more efficient, that equation is changing. Just since 2014, the cost of offshore wind has dropped from $166 per megawatt-hour to $82.

According to a recent piece inthe Guardian, electricity from offshore wind will be less expensive than that produced by a new wave of nuclear plants currently being built. According to Hugh McNeal, a career civil servant who last year joined RenewableUK from the former Department of Energy and Climate Change, "I dont think theres any doubt about the political commitment of any party, apart from perhaps UKIP, to offshore wind. I think its got an incredibly healthy future."

At present, there is only one wind farm, the Block Island Wind Farm, off the coast of Rhode Island, that just came online last year.

The future beyond that is clearly an unknown given President Trumps infatuation with fossil fuels.

However, a group of20 governorsfrom both red and blue states recently sent aletterto the president asking him to support wind and solar. On the question of offshore wind, the letter stated:

The Department of Energys 2015 Wind Vision Report predicted that our countrys offshore wind resources could support the installation of 22 GW of new wind by 2030 and 86 GW by 2050. If we capitalized on that potential, a new American offshore wind industry could create thousands of jobs in research and development, engineering, manufacturing, marine construction and other sectors.

Given its location, offshore wind presents greater development challenges than onshore wind, resulting in longer construction times and higher initial costs. In addition, most of the nations best offshore wind resources are found in federal waters requiring federal permits and other logistic efforts that can add years to the construction timeline.

Because of these offshore development challenges, different tax incentives, infrastructure investments, and research are needed for offshore wind projects to be successful. Understanding this, the governors recently informed Congressional leadership that the nations offshore wind industry cannot grow without specific federal policy foundations that will encourage offshore wind development in shallow and deep water. The governors have urged Congress to approve comprehensive offshore development legislation as soon as possible.

According to theNational Renewable Energy Laboratory(NREL), the gross wind resource along the two coasts of the U.S. amounts to 4,223 GW. Thats an amount roughly four times the entire generating capacity of the current U.S. electric grid.

So, the stage has been set for a massive increase in renewable power, courtesy of offshore wind technology. Governments around the world already are jumping in to take advantage of this opportunity. Hopefully, the U.S. wont be left too far behind.

See more here:

The trials and triumphs of offshore wind - GreenBiz

Even though the oilfield service market in shale is the place to be in 2017, Rystad Energy says there is clear evidence that offshore projects are still being prioritized by exploration and production (E&P) companies.

In fact,for every dollar that is invested into the North American shale market in 2017, a dollar is also earmarked for the development of new offshore resources. Both sources of future production, shale and offshore, will receive around US$70 billion each of planned capital expenditures, says Rystad.

In both 2014 and 2015, E&P companies looked at North America and the shale industry for where they would invest in new production capacity. In 2014,$160 billion was invested into drilling and completion of wells and $20 billion on infrastructure, while only $95 billion was committed to unlock new offshore resources.

For 2015, 40% more was directed towards shale. Both 2014 and 2015 were the result of offshore projects pricing themselves out of the competition of providing oil to the market. However, with two years of cost cutting programs in the offshore value chain,2016 and 2017 are showing full competitiveness within these two sources of supply. This shows what the offshore industry has worked with during the downturn. In a time when many thought that offshore projects could not compete with shale, offshore operators managed to turn uncommercial projects into highly competitive projects with the help from service companies.Offshore projects that were uncommercial at $110/bbl in 2013 are now commercial at an oil price of $50/bbl.

The top 10 offshore projects in 2017 make up almost 70% of all of the committed capex and it is only the best-in-class projects that will pass the decision gate in 2017.One of the key efforts has been reviving projects such as Mad Dog phase 2, Coral FLNG and Leviathan. It would be key for suppliers to be exposed to these projects, but for those that win these contracts, most of them will need to wait until 2018 before seeing increased revenues.

One of the key reasons for offshore projects starting to becoming competitive again, is the strong deflation of unit prices which is actually higher for offshore than onshore. In 2016,unit prices for offshore developments have been reduced 27% from the peak in 2014 for awarded contracts. One of the key segments, which have helped the offshore cost to come down, is related to the immense pressure on dayrates for drilling rigs. Here, prices have come down more than 50%. For other segments, the cost is down more in the range of 20-30%, where subsea is on the upper end.

For onshore developments, the overall deflation is 21% where well services and commodities, as well as land rigs, holds the majority share of the reduction.On top of the unit price deflation, comes efficiency gains, currency effects, and changes to design which have helped total breakeven prices to come down.However, with surging activity increase, both within shale and offshore this year, inflation will take its toll going forward. The time window of low service prices has started to shrink, but it will stay open longer for offshore activity due the longer contract durations and lead times.This will impact even more the 2018 volumes of activity and benefit service companies on their top and bottom line.

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Rystad: Offshore gaining on shale - OE Digital

Some of the best opportunities for upstream companies to move forward during this downturn will be represented through the new technologies and processes discussed and displayed at the Offshore Technology Conference (OTC) in Houston from 1-4 May.

In the midst of enormous change, shifting business, political, and economic paradigms have altered the complexion of the eventbut not its status as a must attend technical conference for engineers and scientists.

OTCs uniqueness spurs from its organizers: 13 nonprofit societies in the energy sector that work cooperatively to develop the technical program. This years event features more than 300 technical papers from leading upstream firms, more than 60 technical sessions, 24 topical breakfasts and luncheons, along with several in-depth panel discussions.

A theme that will permeate OTCs technical program is updates on world-class projects, including Shells Gulf of Mexico Stones project, billed as the worlds deepest subsea development. Low oil prices have created new demand for lower-cost ways to support such projects and that in turn is driving development of breakthrough technologies.

Technologies that will be presented at OTC include a new cement integrity evaluation system developed by Baker Hughes and several all-electric subsea systems that will be the focus of an entire technical session.

OTC will also address new developments in major offshore basins, especially those of Mexico and Brazil, two countries that have made significant changes in the regulation and development of their offshore resources.

One panel session will feature executives from Chevron, BP, ExxonMobil, BHP Billiton, Statoil, and Murphy Oil Corporation that will shed light on companies plans to explore Mexicos virgin deepwater blocks.

There will also be breakfast and luncheon forums on business opportunities in Brazil and a panel session featuring leaders of Shell, Total, ExxonMobil, and Petrobras sharing views on how recently announced government incentives will affect that countrys offshore future.

OTC will also feature new technical topics that were not on the radars of E&P professionals a decade ago. The digital revolution has hacked its way into the program, which will closely examine the issues of big data and the growing importance of cybersecurity.

James Pappas, an OTC program subcommittee vice chairperson representing the Marine Technology Society, said the committee also selected thought-provoking technical papers that match the dual industry needs of safety and improved economics.

These papers, and the sessions in which they are a part of, provide insights into cutting-edge technologies that will result in more efficient and safer operations, he said. Those in attendance will have unique and ample opportunity to interact with others who have similar interests, including the authors and presenters, to discuss their thoughts and experiences and delve into more in-depth knowledge on particular topics.

Pappas noted that attendees of OTC are sure to learn something new to take back to their companies. All they need to do is show up, listen, and speak up, either during the presentations or after the sessions, he said.

Paul Jones, a member of the OTC board representing SPE, explained that attending the conference has enabled him to challenge his thinking and engage with other thought leaders.

OTC is important because it is the premiere venue to see and learn about new technologies and expand your professional networks, he noted, adding that the conference is a must-attend event at any time because of the quality of technical papers and expanse of the exhibition.

To foster the growth of attendees professional skills there will a number of networking events as well as discussions on how to improve business operations. A networking opportunity focusing on efficiency will feature high-level managers from Hess and Kiewit while a luncheon keynoted by executive leaders of Intecsea and Schlumberger will discuss the importance of diversity in an organization.

Joe Fowler, OTC Board Chairperson, emphasized that the conference represents an invaluable platform for new business opportunities and technologies, especially in challenging times. OTC is important because it is the best source of technology for new offshore developments, he said.

Among this years returning highlights is the University R&D Showcase, which showcases innovative ideas and emerging technologies from the world of academia. In a separate event, the Rice Alliance Startup Roundup will give 50 young upstream-focused firms a chance to pitch their innovations to potential investors and interested attendees.

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New is Better at the 2017 Offshore Technology Conference - Journal of Petroleum Technology

Wall Street Journal (subscription)

IRS Audits to Go After Offshore Earnings and Transfer Pricing Wall Street Journal (subscription) The Internal Revenue Service has put companies on notice: It is targeting offshore earnings and transfer pricing as part of a new audit push. The federal tax collector highlighted the two issues last month in connection with a new series of 13 audit ... and more »

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IRS Audits to Go After Offshore Earnings and Transfer Pricing - Wall Street Journal (subscription)

Offshore services costs and rig rates will continue to fall until 2018 when the resulting lower breakeven will boost the sanctioning of new projects by oil companies back to average levels according to Rystad Energy.

In terms of approval of new oil and gas projects globally 2015 and 2016 have approved projects only equivalent to 19bn barrels of oil and gas, most of this was gas, and this was the lowest level since 1967, Jarand Rystad, managing partner of Rystad Energy, told a seminar in Singapore on Tuesday.

The figure of 19bn barrels of approvals for the last two years compares to an average of 30bn barrels annually, and a peak of close 80bn barrels in 2009, over half of which came from offshore.

With higher oil prices in the first half of this year Rystad believes start driving final investment decisions on projects in the second half of 2017, with the levels of approvals returning to the $30bn mark in 2018.

There is a large backlog of deepwater discoveries not sanctioned for development globally, and with oil majors not well positioned to grab a slice of the shale oil market, they will look to develop deepwater discoveries as costs decline yet further over the next two years.

With service industry and the rig costs continuing trending down for another two years these projects will be very competitive versus the breakeven prices in a very hot market for shale, Rystad stated. So basically this will create a global investment curve.

The analyst sees the offshore platform and EPC market hitting the bottom in 2018 with new growth then being seen. Meanwhile the SURF and subsea markets are probably seeing the bottom in 2017 followed by a flattish market with steep growth in 2020.

The overall breakeven for offshore projects would fall from $70 per barrel to around $50 a barrel globally with many at significantly lower levels. Rystad noted a Barents Sea field which had a breakeven of $65 per barrel a year ago and now was $35. Statoil is quite determined it will develop this field and bring it into production by 2020.

If we look at the regions driving this, in the short term it will be Egypt with the Suez development and Norway, and also from 2018 Gulf of Mexico, while Brazil with all the issues we had there, and Angola and Nigeria are not contributing to this growth in the short term, he said.

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Offshore service and rig market to hit bottom in 2018, then rebound on new projects: Rystad Energy - Seatrade Maritime News

Investopedia

Algeria Talking With Exxon on Joint Offshore Ops (XOM) Investopedia Algerian state energy company Sonatrach has begun discussions with ExxonMobil Corp (XOM) and others in order to begin offshore oil drilling. While the Algerian company has experience drilling land-based wells, it needs to partner with an experienced ... Reuters: Algeria's Sonatrach in talks to begin offshore drillingSeeking Alpha Algeria's Sonatrach in talks to begin offshore drilling sourceHellenic Shipping News Worldwide all 3 news articles »

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Algeria Talking With Exxon on Joint Offshore Ops (XOM) - Investopedia

Given all the recent talk about a Revenue clampdown on offshore assets could you please clarify what should be declared and how to do so?

I am a PAYE taxpayer. I have two modest offshore accounts, one in euro and one in a foreign currency. They are deposit accounts which earn no interest. There also hasnt been any trading in the foreign currency which might give rise to capital gains.

Until these deposits (or indeed any other offshore assets) generate income, can I assume there is no need to declare them? I note that Form 12 caters for foreign income but otherwise does not invite a declaration of non-earning deposits.

Mr JF, email

As you are a PAYE employee, you probably will not have received any letter recently from the Revenue Commissioners about this. The tax authorities did send out nearly 500,000 letters warning people about impending changes to the regime on failure to disclose offshore income but they only went to people who filed returns last year and that means largely self-assessed taxpayers.

Youre right to be concerned but, as it happens, I think you will be fine and will not be facing any liability.

Right to be concerned? Well, the thing with offshore tax evasion is that everyone assumes, when they hear about it, that the tax authorities are talking about the big players looking to hide ill-gotten millions. And its certainly true that Revenues investigations and large-case unit does actively pursue such players.

However, the bulk of those people likely to be caught under the new rules are small scale taxpayers who will never to this point have had cause to deal personally with Revenue beyond a Med 1 health claim or the comfortable anonymity of a Form 12 annual return.

These are the people who may have spent some time abroad and set up accounts there, or bought shares or even a small house or apartment. Maybe, if they are older, they will be in receipt of a pension either from a foreign state or a private employer in another country.

For Irish taxpayers, all of this counts as income and/or assets and so it is of relevance to the Irish tax authorities as Irish tax residents pay tax here on their worldwide income.

Another thing people also tend to forget is that Northern Ireland is just as offshore as Australia, the United States or anywhere else in the world.

For all these reasons, people should be concerned and should do an audit of their assets to see if they might have any tax liability which they may have forgotten to mention to the Revenue up to now.

Well, from May 1st, anyone approaching Revenue with details of tax liability on offshore assets or anyone approached by Revenue on the same issue will not be able to avail of what is called voluntary disclosure. Voluntary disclosure is a regime where Revenue cuts the taxpayer a bit of slack as an incentive to fess up rather than waiting for Revenue to invest the time, energy and money pursuing them.

While taxpayers using voluntary disclosure still have to pay the tax owing, and interest due on it dating back to when it should have been paid, they pay just a fraction of the penalties that would apply if Revenue has to come chasing after them. Penalties are about 10 per cent of the tax due rather than up to 100 per cent for those caught.

Anyway, in relation to foreign tax liabilities, Revenue has persuaded Government that these things cannot simply be hidden from Revenue accidentally and that forgetting to let Revenue know of such liabilities is actually a deliberate act and so such people should not be able to avail of the relief of voluntary disclosure.

And tax authorities in different countries are now working much more closely with each other. So the Irish Revenue either has already (depending on the jurisdiction), or will later this year, received any details about you, and all other Irish taxpayers, that is held by tax authorities in most other countries. That will certainly include details of foreign bank accounts among other things.

That is why Revenue is so sure of its ground and its ability to track down people with offshore tax liabilities, no matter how large or small.

Minister for Finance Michael Noonan announced in his budget last October that there would be a clampdown and the necessary amendments have been made to the Taxes Consolidation Act 1997. This new regime kicks in on May 1st, so the message Revenue is giving people out there is that the clock is ticking and they need to act fast to minimise any tax bill.

Apart from lower penalties, errant taxpayers getting their affairs in order before May 1st will avoid the possibility of having their names published in the quarterly list of tax defaulters that appears in Iris Oifigiil and most national newspapers, and will also avoid the, albeit for most remote, possibility of criminal prosecution.

So where does that leave you? You tell me that you have these two offshore accounts. There are two ways in which you could be liable. First, where did the money come from that is sitting in the accounts? Does it date back to a time when you were not a tax resident here? If so, you should be fine. But if the money was put into the accounts since you became liable to Irish tax, it might be liable to Irish tax.

If it was an inheritance, it depends on whether the bequest would bring you over tax-free inheritance tax thresholds; if it was a capital gain on the sale of some asset held abroad, it would be liable to tax here if it exceeded 1,270. And, of course, if it came from income maybe from a pension or from some foreign project you undertook it should certainly have been declared to Revenue at that time.

If not, you could be in trouble and may need to approach Revenue ahead of the May 1st deadline.

The second issue is any income that these accounts may be giving you. You state that neither is delivering any interest but was that always the case? If there is no interest income now or in the past, there is no liability on that front. If there was, the rules above apply.

And, if you do have something to approach the Revenue about, how do you go about it?

Revenue is hoping people will file any details of the tax and penalties owing through the online MyEnquiries facility available to those filing by ROS (Revenue Online Service) or, for individuals, more likely MyAccount.

You will need to file a Disclosure Form, including a computation of tax, interest and penalties owed. To help on this, Revenue is providing an estimator essentially a special calculator allowing you to work out your liability. You dont have to use its estimator but it may well be easier than you trying to work out any liability especially interest due, which is worked out at a daily rate.

The disclosure forms and estimator are at revenue.ie/ en/business/disclosure.html. That same page also includes a fairly comprehensive file of frequently asked questions (FAQs).

To sum up, if the money in these accounts came from after-tax income and you have earned no interest on them, youre fine and do not need to do anything.

One last thing. For those who do have liabilities but only of a minor nature, they should note that, where the full historical liability on offshore assets and income is less than 6,000, no penalty will be applied either before or after the May 1st deadline but you will still have to pay the tax due.

Send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice.

Originally posted here:

Worried about Revenue clampdown on offshore assets - Irish Times