April 30, 2020 / 9:07 AM / 3 months ago

UPDATE 1-Norway eyes temporary tax relief for oil firms

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OSLO, April 30 (Reuters) - Norway’s minority government proposed on Thursday to temporarily change tax rules for oil firms in a bid to prevent a collapse in investments amid the COVID-19 pandemic, Prime Minister Erna Solberg said on Thursday.

The plan could boost the liquidity of oil firms by as much as 100 billion Norwegian crowns ($9.7 billion) combined for 2020 and 2021, by allowing faster write-offs of investments, and thus effectively postponing tax payments until later years, she said.

Norway is western Europe’s biggest producer of oil and natural gas, and represents about 2% of global crude output.

The plan does not change the headline tax rate of 78% which oil firms pay on profits, but by raising deductions on new investments, the taxable profits will become much smaller in the next several years.

“Even if the government pursues a policy of becoming less dependent on oil, it’s important to prevent that the current crisis does not make the decline so rapid that we lose key competence that will help the transition,” Solberg said.

On Wednesday the government said it would join other major producers in cutting oil output this year in a bid to help prices recover from the recent plunge. ($1 = 10.3202 Norwegian crowns) (Reporting by Terje Solsvik, editing by Gwladys Fouche)

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