The government today, at a 30 April 2020 press conference, announced that it will propose certain time-limited tax reliefs for the oil and gas industry, with a proposed effective date for 2020.
The details of the proposal will be issued as a separate “white paper” that will be published together with the revised national budget, scheduled for 12 May 2020. The government will also need to assess and determine that the proposals are aligned with the EEA agreement.
The key elements of the proposal are as follows:
Tax professionals have observed that the government only presented a very brief summary of the proposals during the press conference, and details of the proposal are not likely to be presented in full until 12 May 2020. Given that the government does not have majority in the Parliament, the final outcome of the proposal as presented for the Parliament may be subject to adjustments.
Even if the government's ultimate proposals are much the same as those suggested by the petroleum and service industry, they may be more limited—e.g., direct expense only for the 56% tax basis, reduced uplift for the expensed capital expenditure, and a reduced period for refund of the tax value of losses. The proposal would improve the situation for the petroleum sector, but the effects of a direct expense would be reduced for industry entities that are not in a tax-paying position, and a refund of tax losses for 2020 and 2021 would most likely not result in any payouts before late 2021 and 2022 respectively and thus with potentially limited immediate liquidity effect.
The petroleum industry is Norway's largest industry. Norway is the eighth largest producer of oil and the third largest producer of gas in the world. The service and supply industry is Norway’s second largest industry measured in terms of turnover, after the oil and gas industry, and includes more than 1,250 companies. Recent events have affected the broader petroleum-related industries, and hence, the government has proposed certain amendments to the petroleum tax law as measures to maintain investment activities and also to secure work for the oil service industry.
For more information, contact a KPMG tax professional in Norway:
Jan Samuelsen | +4740639395 | email@example.com
Per Daniel Nyberg | +4740639265 | firstname.lastname@example.org
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