Norwegian state oil giant Statoil is reportedly threatening to flag out its operations due to proposed changes in the domestic fiscal regime that could leave it with a huge tax bill.
The company, led by chief executive Helge Lund, stated in its recent third-quarter results
report that it could face a one-off deferred tax charge of Nkr2.3 billion ($398.5 million) as a
result of new tax rules for overseas activities being proposed by Norway’s
Under the existing regulations, Statoil is able to claim tax
relief on costly foreign exploration activitie,s while Norway is denied tax
revenue from overseas fields that are brought into production.
The Oslo government therefore is proposing changes to the Norwegian
tax system as it effectively sponsors the company’s overseas operations,
according to business daily DN.
”This is in principle unfortunate and will have significant
financial consequences in the longer term if the current regulations remain
unchanged,” the ministry said in a recent statement when the proposal in the
state Budget for 2013 was submitted for consultation.
However, Statoil contends such a change in the tax rules
would present a competitive disadvantage when working overseas and tax director
Finn Lexow said the company is now set to carry out an organisational review ”to
secure our international competitive strength”.
”Changes in the rules for taxation ofoverseas income being
proposed in the state Budget will mean that Statoil will no longer gain tax
relief for foreign exploration without results,” he said, adding that many of its
competitors would still be entitled to such a benefit from their homeland.
”This gives us a tax-related incentive to move our operation
and personnel out of Norway,” Lexow added.
In a similar case, Norwegian rig giant Seadrill has decided
to move its headquarters and management team from Stavanger to London due to
the high costs of doing business in Norway, as well as the difficulty in
procuring qualified personnel.
Its chairman John Fredriksen is a long-time critic of the Norway’s
tax conditions and regime for business operations.