The strong competitiveness of the Norwegian economy is built on openness and transparency, with policies that support dynamic trade and investment, and the legal framework is among the world’s strongest, providing effective protection of property rights. The tax rebate of 78% of exploration investment makes Norway an attractive destination for O&G investment. While we have maintained our outlook at Neutral, we have lowered our risk premia to 3.25% to reflect the increase in relative fiscal stability.
February 4, 2024
Europe - North West
Companies involved in upstream activities within the geographic areas described in Section 1 of the Norwegian Petroleum Tax Act is subject to a marginal tax rate of 78% (23% ordinary corporate income tax and 55% resource rent tax) on the net operating profits derived from its extractive activities. The area covered, generally, is the area within Norwegian territorial borders or on the Norwegian continental shelf (NCS).
In Norway, there is a clear division of roles in economic policy. The government is responsible for setting fiscal policy, while Norway’s Central Bank sets monetary policy with the primary goal of maintaining economic stability. While the coronavirus pandemic dampened economic activity in early 2022, government fiscal support and the phasing-out of pandemic restrictions led to an economic recovery. However, high consumer price inflation primarily driven by electricity price increases, and global supply bottlenecks in computer chips, lumber, and shipping, have added pressures to inflation. To tackle it, the Central Bank has gradually increased the reference interest rate since 2022 and the Parliament approved in December 2022 a contractionary budget for the 2023 fiscal year.
Source: ESRI, Heritage Index, HMG Foreign & Commonwealth Office, US Department of State, International Trade Administration, International Law Review, Ernst & Young, Wood Makenzie & OGA data.
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