The Oil Taxation Office

The Oil Taxation Office is responsible for the taxation of Norwegian and international companies that engage in exploration for and extraction of oil and gas on the Norwegian continental shelf. The Head of Section for the Oil Taxation Office is ultimately responsible for the professional work of the office. 

Prior to 1 July 2015, the Oil Tax Assessment Board carried out the tax assessment of petroleum companies with activities on the Norwegian shelf. The Oil Taxation Office was responsible for preparing cases. On 19 June 2015, the Storting decided that the Oil Taxation Office was to become the competent authority in the first instance with effect from 1 July 2015. The Oil Tax Assessment Board ceased to exist from the same date.

From 1 January 2019, the Oil Taxation Office has been located in the Priority Risks Division of the Large Business department in the Tax Administration.

The Oil Taxation Office and the Ministry of Finance are in constant dialogue with each other concerning the interpretation and development of the rules that make up the petroleum tax system. The Office provides professional assistance when amendment in laws and directives related to petroleum taxation is being considered. In some cases, the Office can provide formal consultation statements, while on other occasions, they provide informal suggestions and assessments. It is often necessary to make calculations in order to investigate the effect of different types of legislative amendments, and the Oil Taxation Office will generally be able to provide the relevant figures and expertise. The Office sometimes also raises issues on legislative amendments. The Oil Taxation Office is also often consulted regarding the interpretation of existing legislation.

The Petroleum Tax Appeal Board

The Petroleum Tax Appeal Board has seven members with specialist qualifications within law, accounting and finance. The King appoints members for a term of up to four years. The Petroleum Tax Appeal Board is completely independent.

The Petroleum Tax Appeal Board processes all appeals related to the Oil Taxation Office’s tax basis assessments.

The tax assessment process for petroleum companies

Ordinary tax assessment

Every year, the Oil Taxation Office receives tax returns from all upstream oil and gas companies on the Norwegian shelf. The deadline for submitting the tax return is 30 April in the year after the income year. The tax assessment notice is published in autumn, normally in late November/early December. The Office reviews the tax returns, collects additional information and decides whether the self-assessment should be used as the basis for calculating tax or if it should be changed.

The Office calculates the tax based on the individual company's self-assessed tax basis. All amendments to the the company's self-assessments must be justified in administrative decisions, which are sent to the company together with the notification of tax assessment.

Assessment revisions

Conditions revealed during the ordinary tax assessment, but which are not processed before the tax assessment notice is sent, are considered assessment revisions. Sometimes conditions are identified which concern previous income years. Assessment revisions are decided through written administrative decisions issued by the Office.

External audits

Some issues are difficult to solve through telephone contact and written correspondence. In such cases, audits of or meetings with the companies may be conducted in order for the Office to obtain the required information. 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 individual decision, The Oil Taxation Office prepares appeals along with a memorandum for the Petroleum Tax Appeal Board with an assessment of whether or not the appeal should be upheld. The appeal memorandum provides a description of the actual conditions, the tax assessment, the appeal and the Office's view of the company's allegations in the appeal. The appellant is given the opportunity to submit remarks on the Office's statement before the appeal is forwarded to the Petroleum Tax Appeal Board for decision. The Petroleum Tax Appeal Board reaches decisions concerning appeals through a written, justified administrative decision.

Court cases

If a company does not accept the Petroleum Tax Appeal Board's decisions, the case can be referred to the legal system. This happens in particular in cases of fundamental importance and cases involving large amounts of money. The cases pass through the court system in the normal way. The Attorney General handles the cases on behalf of the state, but the Office provides assistance with the preparation of pleadings and more. In some cases, it can take several years before a case is finally resolved. The Oil Taxation Office has several cases before the courts at all times.

Mutual agreement procedure (MAP)

The Office works on many cases concerning the pricing of transactions between companies in multinational corporations (transfer pricing). If a Norwegian extraction company requests MAP to be initiated, the case will be prepared by the Oil Taxation Office in cooperation with the MAP/APA section in the Large Business department in the Tax Administration. The Ministry of Finance has decision-making powers and participates in the negotiations. 

MAP is a legal arrangement that is based on tax treaties. It aims to help countries use the tax treaties’ material provisions correctly. The arrangement is a dispute resolution mechanism that taxpayers may invoke in individual cases.

Advance rulings

Companies can request that the Oil Taxation Office makes an advance ruling on the tax implications of a specific planned disposition. Amongst other things, there is a scheme where companies can request an advance ruling on what price will be used for assessing the tax basis when dry gas is sold to a related company.