Norway Weighs Tighter Taxation of Oil Industry as Election Looms
(Bloomberg) -- Norway, Western Europe’s biggest oil producer, proposes overhauling how it taxes the companies that extract petroleum from fields off its coast.
The depreciation and uplift rules in the special tax for petroleum will be replaced by immediate expense recognition of investments, or cash flow tax, from 2022, Finance Minister Jan Tore Sanner told reporters in a snap press conference in Oslo. The changes are estimated to increase central government revenues by about 7 billion kroner ($810 million) over time for investments made in 2022.
“This is a change that will mean that the system will be a little tighter, but also neutral, and there will be good conditions for both Norwegian and foreign companies in the future,” Sanner said in an interview.
The proposal calls into doubt the stability of the oil industry’s framework conditions that form the foundation of the Norwegian fiscal system, just two weeks before a national election. Polls indicate that Prime Minister Erna Solberg’s incumbent government coalition will likely be replaced.
While the two largest parties, Labor and the Conservatives, back the oil industry, the smaller parties that they will depend on to form a government are calling for an end to exploration.
“With this, the Wild West era is over,” Frederic Hauge, leader of Norwegian environmental group Bellona, said in an emailed statement. “Most companies that are not currently in a tax position will think twice, and we can expect consolidation and closure of more companies in the future if this is adopted.”
The proposal may face resistance in parliament with Sylvi Listhaug, the leader of the party that has backed government budgets since it split from the coalition, telling E24 that it is unbelievable that the Conservatives would suggest such a change.
The proposal will be sent for consultation within a week.
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