On 31 August 2021, the government of Norway has issued a release proposing amendment to the petroleum taxation system. Under the amendment, the Government is proposing to revise the special petroleum tax system as of 2022, replacing the rules on depreciation and uplift with immediate investment expensing (cash-flow tax).
Main elements of the proposed new petroleum taxation system:
- Investment costs (section 3b operating assets) will be expensed immediately for the purposes of the special tax. This will replace the current system of deprecation and uplift. The change will only apply to new investments, not investments covered by the temporary rules.
- Under the new special tax rules, the tax value of new losses will be settled in connection with the tax assessment. The consultation paper requests feedback on the need for and appropriate design of a system for pledging loss refunds.
- By way of transition to the new rules, the tax value of loss carry-forwards and unutilised uplift from earlier years will be settled for the purposes of both the special tax and corporation tax.
- Assessed corporation tax will become deductible from the basis for calculating the special tax, and the special tax rate will therefore technically increase from 56% to 71.8%.
- The exploration costs tax refund and the cessation tax refund will be eliminated from the corporation tax system, and losses will be carried forward net of interest.
