Norway Hands $10 Billion in Tax Deferrals to Ailing Oil Industry

Norway aims to improve the liquidity of oil companies by as much as 100 billion kroner ($9.7 billion) by deferring taxes to stimulate investment during the market rout.

Norway’s oil industry had pleaded for help as it faces a global glut in crude as demand collapsed because of the coronavirus pandemic, warning that billions in spending in the country’s biggest sector was at risk. Western Europe’s biggest oil producer on Wednesday also said it would cut crude production, joining international efforts to curb supply for the first time in 18 years.

Read: Norway Joins Oil Production Cuts for First Time Since 2002

The minority government’s proposed changes, which will need to be validated by Parliament and checked against European competition rules, will accelerate deductions for investments decided by the end of 2021, and completed no later than 2024. Companies will also be able to claim the tax value of losses in 2020 and 2021.

Prime Minister Erna Solberg insisted the measures weren’t tax cuts, and that deferred taxes will be compensated by higher levies in the future.

“We’re not talking about inflating anything, we’re talking about slowing down a fall,” she told reporters. “This is not a gift to shareholders, this is done to save jobs.”

The measures are expected to lead to deferred petroleum taxes of 60 billion kroner in 2020, Finance Minister Jan Tore Sanner said at the same press conference. That’s set to further weaken Norway’s budget as the country prepares to withdraw record amounts from its sovereign wealth fund to support the economy.

To contact the reporter on this story:
Mikael Holter in Oslo at mholter2@bloomberg.net

To contact the editors responsible for this story:
Tasneem Hanfi Brögger at tbrogger@bloomberg.net

Stephen Treloar

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