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Norway defends its tax regime supporting oil exploration

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Staff Writer | February 10, 2018
Norway oil field
Oil exploration   Norway allows companies to deduct 78 percent

Norway's tax rules for the oil industry do not constitute state aid, its finance ministry told a European competition watchdog.

The competition watchdog of the European Free Trade Association (EFTA) is investigating the tax regime following a complaint by Norwegian environmental group Bellona.

Environmental groups, including Greenpeace, have also mounted a legal battle in Norway to try to stop the government from expanding exploration areas in the Arctic.

"The Ministry maintains that the Norwegian rules on reimbursement of exploration costs and interest on carry forward of losses... do not constitute state aid under Article 61 of the EEA Agreement, and are therefore in compliance with the EEA (European Economic Area) law," the ministry said in a letter.

Norway allows companies to deduct 78 percent of their exploration costs from taxable income. Since 2005, companies without taxable income have been reimbursed for the value of this benefit directly in cash.

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