The Norwegian Government has approved its 2016 Fiscal Budget on 14 December 2015. The corporate income tax rate has been reduced from 27% to 25%. The current limit of NOK15 million increases to NOK20 million for in-house research and development (R&D), while the cap for procured R&D increases from NOK33 million to NOK40 million under the Norwegian tax incentive scheme for R&D. The application of the participation exemption with regards to dividends received by a Norwegian company will no longer apply to the extent that the distribution has been tax deductible at the level of the distributing entity (hybrid instruments). For companies taxed under the special petroleum tax regime and the hydro power regime, the reduction in corporate tax rate will be balanced by a corresponding increase in the special tax rates for these regimes.