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Newsletter: Temporary amendments of the petroleum tax act

The Government announced at a press conference 30 April that they would propose certain measures for the petroleum sector. The purpose is to contribute to maintain the level of activity and the employment within the oil and gas sector during the COVID-19 pandemic.

Updated: 11 June 2020

The Government initially proposed (ref. below) that companies not in tax position shall  be entitled to a pay out from the State of the tax value (currently 78%) of the tax loss an unused uplift in the income years 2020 and 2021. The majority of the Parliament voted in favour of that. The Governments proposal had for its object that a claim for refund should be made in the company’s income tax return for the income year in question, and that  pledging of claims for a future pay out from the State shall be possible, i.a. a model similar to the existing exploration refund scheme. That part of the proposal from the Government was not accepted by the majority of the Parliament. The majority voted in favour of a model with pay out from the state 6 times/year in the form of refund of negative tax instalments, i.e.  pay out of estimated loss in the income year without having to await income tax return and tax assessment. Hence pledging of a company’s claim for future pay-out from the State is not necessary nor possible.

https://www.stortinget.no/no/Saker-og-publikasjoner/Publikasjoner/Innstillinger/Stortinget/2019-2020/inns-201920-351l/?all=true

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Updated: 9 June 2020

A majority of the members of Parliament has agreed to vote in favour of the proposals from the Government, with the following amendments however:

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Published 12 May 2020

The Government announced at a press conference 30 April that they would propose certain measures for the petroleum sector. The purpose is to contribute to maintain the level of activity and the employment within the oil and gas sector during the COVID-19 pandemic.

The Government proposed targeted, temporary amendments of the petroleum tax legislation, previously described in our newsletter dated 30 April:

https://www.adeb.no/aktuelt/aktuelt/newsletter---temporary-amendments-of-the-petroleum-tax-law-and-certain-measures--with-an-environmental-profile/

LEGISLATIVE PROPOSALS – OVERVIEW

Introduction

The Government presented 12 May the formal legislative proposal to the Parliament:

https://www.regjeringen.no/contentassets/db9b4c93e0ea43f18ebe40a035f995d1/no/pdfs/prp201920200113000dddpdfs.pdf

The proposals are in line with the Government’s announcement 30 April, but is obviously more substantiated and described more in detail. The Government proposes that the temporary amendments are included in new Sec. 11 (6) of the Petroleum Tax Act.

The proposed temporary amendments

The Government proposes:

Immediate tax deduction and 10% uplift shall be applicable for costs incurred in the income years 2020 and 2021.

Investments covered by development plans for fields (PDO) and transportation infrastructure (PIO) submitted within end of 2021 and approved within end of 2022 should also be covered by said proposals. It is also a condition that the plan is actually approved after the date of the Government’s proposal, i.e. 12 May 2020. Any investment made after 2024 is not covered by the proposal.

This part of the proposal shall enter into effect immediately with effect for costs incurred and unused uplift in 2020 and 2021. The tax authorities shall determine the refund amount as a part of the tax assessment for 2020 and 2021 respectively. The Government proposes however that pledging of claims for a future pay out from the State shall be possible, cf. proposal to a new Sec. 11 (6) of the Petroleum Tax Act with a reference to the Tax Payment Act Sec. 10-1 (3).

The Ministry of Finance estimates that the effect of the proposals combined for the income years 2020 and 20021 will imply an increased cash position of NOK 100 billion for companies subject to special petroleum tax.

Competence

Contacts