OLSO: Norway’s tax rules, as they relate to possibly being considered to be state aid for oil exploration, the country’s finance ministry has issued a public statement denying such a situation. The investigation by the competition watchdog of the European Free Trade Association (EFTA) follows from a complaint filed by the Norway-based environmental group Bellona. 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,” a letter issued by the Norwegian finance ministry reads
The argument used in the public statement from the finance ministry to counter this assertion reads: “This means that if income is derived from petroleum activity taxed at a rate of 78%, the state, through the tax system, should cover a corresponding share of the cost incurred to earn this income.”
While that argument has a sort of logical consistency to it, Norway’s practices certainly are something of an outlier in Europe, and very arguably part of the reason that oil and gas development exploration in the Arctic Barents Sea is now ongoing. Potential losses will be covered by the state.
