ABSTRACT
With the new policy framework the proposed fiscal regime can achieve its mandate of strongly supporting the Maximising Economic Recovery (MER UK) objectives. It certainly is evident that with comparatively lower returns, higher costs, increased complexities and the associated uncertainties the time is, and has been, appropriate for reforming the fiscal regime. In its Fiscal Review it set the objective of the reform as supporting the MER UK goal while ensuring a 'fair return' for the UK in the form of 'rent'. The results of the Monte Carlo analysis showed that the fiscal regime was certainly non-neutral for both investor types, particularly when the oil prices were modelled as stochastic. This meant that the tax regime was increasing the chances of turning a cash flow that was positive pre-tax to a negative one after tax. Thus, the quantitative analysis supported the conclusion of the theoretical analysis that the Fiscal Review reforms fell short of its own objective.
