Correction of tax statistics - paid exploration expenses

The rules were introduced because the authorities wanted to reduce any entry barriers to the oil sector and to create conditions conducive to economically profitable petroleum exploration (see revised national budget 2004 and the new rules in the Petroleum Tax Act adopted on 10 December 2004).

Two new rules

According to the first rule, companies may be paid the tax value of the expenses incurred in the exploration of petroleum deposits. The rule applies to companies which have not been assessed tax, on condition that paid exploration expenses do not exceed the financial year’s deficits.

According to the second rule, companies may be paid the tax value of uncovered deficits and excess free income when petroleum activity ends.

Consequences of the correction

Statistics Norway’s tax statistic did not include the figures related to the rules when they were introduced in 2005. Given that these rules are linked to petroleum taxation, corrected statistics are published. Paid exploration expenses under the two rules are now tax deduction for companies assessed under the Petroleum Tax Act.

This means that the figures for paid exploration expenses are now treated as tax deductions and reduce total tax revenues from the oil sector.

The effect of this on the statistics is that assessed taxes for 2009 totalled NOK 218 billion, which is NOK 9 billion less than in the 20 December 2010 publication . A new variable “paid exploration expenses” is added to tax statistics for companies.

Tax statistics for companies is included in Survey of tax assessment , and the new rules therefore also affect figures in the survey.