The Petroleum Tax Office and the petroleum tax system

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The Petroleum Tax Office is responsible for the taxation of Norwegian and international companies involved in oil and gas exploration and production on the Norwegian shelf.

Prior to 1 July 2015, the Oil Taxation Board was responsible for assessing the tax basis for petroleum companies operating on the Norwegian shelf. The Petroleum Tax Office was responsible for preparing cases. On 19 June 2015, the Storting decided that the Petroleum Tax Office was to become the competent authority in the first instance with effect from 1 July 2015. The Oil Taxation Board was abolished from the same date.

Assessment of the tax base

Every year, the Petroleum Tax Office receives tax returns from all upstream companies on the Norwegian shelf. The deadline for submitting the tax return is 30 April of the year after the income year. The tax assessment is published in the autumn, by no later than 1 December. The office reviews the tax returns, obtains additional information and assesses whether the self-assessment should be used as a basis or amended.

The office will then assess the tax basis for the individual company. All amendments to taxpayers’ self-assessments are justified in specific administrative decisions, which are sent to the taxpayers concerned together with the tax assessment notification.

Amendment cases

On occasions, circumstances are identified which concern previous income years. Amendment cases are decided through a written administrative decision issued by the office.

External audits

Some issues may be difficult to clarify over the telephone or through written correspondence. In such cases, audits of or meetings with the companies will be conducted in order to obtain the information that the office requires. External audits are carried out on the company’s premises and may last one or more days. This makes it possible to review large quantities of documentation and look into issues in detail.

Appeal cases

If a company appeals against an assessment of its tax basis or an amendment decision, the office will prepare a memorandum to the Appeal Board with an assessment of whether or not the appeal should be upheld. The appeal memorandum presents a description of the factual circumstances, the determination of the tax assessment, the appeal and the office's view of the company's claims in the appeal. The appellant is given the opportunity to submit remarks concerning the office's statement before the appeal is presented to the Appeal Board for consideration. When the board has considered the case, the office will prepare a draft for an administrative decision in the appeal case.

Legal cases

If a company does not accept the Appeal Board's decision, the case will be referred to the legal system. This particularly happens in cases of fundamental importance and cases involving large amounts of money. The cases pass through the legal system in the normal way. The Office of the Attorney General of Norway handles cases on behalf of the State, but the office provides assistance in the form of the preparation of observations. The legal/administrative department has primary responsibility for this aspect of the office's work. In some cases, it can take several years before a case is resolved with final effect. The Petroleum Tax Office has cases which have been presented to the courts at all times.

Mutual internal pricing agreements (MAP/APA)

The office works on many cases involving the pricing of transactions between companies in multinational concerns (internal pricing). If a Norwegian production company asks for MAP to be initiated, the case will be prepared by the Petroleum Tax Office in collaboration with the MAP unit (the department for mutual internal pricing agreements) in the Central Tax Office for large enterprises. The Ministry of Finance has decision-making powers and participates in the negotiations.   

Advance statements

Companies can ask the Petroleum Tax Office for an advance statement concerning the tax implications of an appropriation which they are considering. There is for example a scheme where companies can request an advance statement concerning the price that will be used as a basis when assessing the tax basis when gas is sold to a related company.

Regulatory development and interpretation

The office provides specialist assistance in cases where amendments to laws and regulations linked to petroleum taxation are under consideration. In some cases, the office can provide both formal consultation statements and, on other occasions, more informal input and assessments. It is often necessary to perform calculations in order to investigate the effect of different types of legislative amendments, and in such cases, the Petroleum Tax Office will often be able to provide the relevant figures and expertise. The office sometimes also raises issues concerning legislative amendments. The Petroleum Tax Office is also often consulted regarding the interpretation of existing legislation.

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