Norway announced it will raise taxes on oil companies by about 3 billion kroner ($520 million) a year to damp cost pressures and overheating in western Europe’s biggest oil producer.
The government will limit four-year exemptions on so-called free cash flow to 22 percent from 30 percent and raise the special petroleum tax to 51 percent from 50 percent, keeping a top tax rate of 78 percent, according to a presentation in Oslo today. The increase comes as it also lowered overall corporate taxes to 27 percent from 28 percent, which will be financed by closing loopholes and corporate interest rate deductions.
“The changes will lead to an increased focus on costs in the petroleum industry,” Finance Minister Sigbjoern Johnsen said. “This can damp the pressure and cost increases created by the high activity level in the petroleum sector.”
Norway is starting to feel the pain from Europe’s debt crisis and the strengthening krone even as it struggles to absorb wealth from its offshore oil and gas production. This has split the economy, causing job cuts in traditional industries such as forestry production as record investment offshore pushes wages and costs up nationwide.
bloomberg
