Norway increases oil taxes amid industry warnings
Baku, May 6 (AZERTAC). The government of Norway said Sunday it would increase taxes on oil companies and multinationals to finance tax relief to its struggling mainland industry, but the oil sector warned projects to boost the country`s falling oil output might be shelved. "Some sectors are performing very well, pushing prices and salaries higher. At the same times, businesses that can`t increase prices because they depend on global markets are squeezed by high costs and lower demand from abroad," said Prime Minister Jens Stoltenberg at an Oslo press conference held on Sunday because his plans were stock sensitive. The government said it would reduce the general corporate tax to 27% from 28% as of 2014. This would shave 2.4 billion krone off the annual tax bill for the mainland industry, as well as NOK500 million annually for those who are self-employed, the government said. Oil companies would not benefit from the cut, the government said, because it was offset by an increase in the special petroleum tax to 51% from 50%.
Neighboring Sweden recently cut its corporate tax to 22%, and Denmark plans to reach the same level by 2016.
Mr. Stoltenberg slammed oil companies for a number of cost overruns on big projects, and said the companies would have to pay a bigger share of the investments from now on.
"We think we 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," said Mr. Stoltenberg. The 24 oil projects under development offshore Norway have experienced cost overruns of NOK49 billion ($8.4 billion) compared to the original plans, according to government figures. Mr. Stoltenberg said "90% of this is paid for by the society."
Oil companies would still be able to deduct most of their investment costs, but slightly less than before. By reducing a tax deduction called the "uplift," oil companies` tax bill was expected to increase by NOK70 billion in current value between 2013 and 2050, the government said, or slightly below NOK3 billion annually.
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