Oil Taxation Act 1975 section 20

Meaning of market value of oil

Section 20 defines how the market value of oil is to be determined for the purposes of petroleum revenue tax, establishing the price that oil would fetch in an arm's length sale on the open market.

• Market value means the price oil would reasonably fetch if sold in an open market transaction between a willing buyer and willing seller dealing at arm's length.
• Where oil is not actually sold, or is sold in circumstances that do not reflect a true market price (such as sales between connected parties), a notional market value must be established.
• The market value is determined by reference to the price prevailing at the time of delivery or appropriation, taking into account the quality and quantity of the oil and the terms on which it is delivered.
• The Treasury may make regulations specifying how market value is to be determined in particular circumstances, ensuring consistency across different oil fields and transactions.