Norway Hikes Oil Taxes

May 6, 2013 Taxation in Norway

Jens StoltenbergOSLO – New hikes to taxes on profits earned by the oil industry in Norway are set to fund a tax cut for all other businesses in the country.

In a press conference held on May 5th in Oslo the Prime Minister of Norway Jens Stoltenberg announced that the country’s corporate tax rate would soon be dropped from 28 percent to 27 percent, but the tax obligations faced by businesses in the oil industry would be increased.

The cut to the corporate tax rate will cost the government approximately NOK 3 billion, but the move is expected to boost economic activity around the country.

To fund the cut to corporate taxes, the special petroleum tax levied on profits drawn by oil extractors will be raised from 50 percent to 51 percent.

The subsidies provided to oil companies will also be reduced, with the write-offs currently offered to oil companies being dropped from 30 percent of the initial investment amount to only 22 percent.

According to the Prime Minister, the reduction in subsidies will force businesses in the oil industry to be more cost conscious, and the change will “…give a better signal to the oil companies when they must now bear a bigger share of the investments themselves, not the least because we need more cost awareness in that sector.”

The government will also tighten tax regulations in order to stop oil companies from shifting their profits overseas to low tax jurisdictions in order to minimize their tax obligations in Norway.

Photo by Arbeiderpartiet