THE WALL STREET JOURNAL: Norway Oil Indus Can Expect EUR1B Tax Rebate -E&Y: “"This decision by the Norwegian Supreme Court now opens the door for oil companies, including the majors, to follow Shell's lead and seek repayment of past taxes," said Derek Leith, the head of Ernst & Young's oil and gas taxation.” (ShellNews.net) Posted 14 Jan 05
DOW JONES NEWSWIRES
STAVANGER, Norway (DOW JONES)--Oil and gas companies operating on the Norwegian Continental Shelf can expect a EUR1 billion windfall tax following a recent court case in Norway's supreme court, consultants Ernst & Young said Thursday.
In December, Royal Dutch/Shell Group (RD, SC) argued successfully that it should be able to take decommissioning costs as a tax deduction, contrary to the Norwegian Tax Authority's interpretation, Ernst & Young said.
Shell spokesman Geir Haug said the company had won NOK111 million for the 1995-1996 tax years, not including interest. As a result of the case, Shell is also expecting payouts for the tax years between 1997-2004, but Haug wouldn't give figures, as that dispute has yet to be finalized.
"This decision by the Norwegian Supreme Court now opens the door for oil companies, including the majors, to follow Shell 's lead and seek repayment of past taxes," said Derek Leith, the head of Ernst & Young's oil and gas taxation.
"It is anticipated that the tax cost to the Norwegian Exchequer could be around EUR1 billion," Leith said, adding that the figure is based on information from the government.
Haug said a number of other similar tax cases had been held up pending the Supreme Court's decision, but would now be able to move ahead with guidance from the ruling.
Leith said the government would likely to shortly change the law so that from Jan. 1, 2005, decommissioning wouldn't be tax deductible until costs are incurred.
Companies will likely not have to go to court to get the rebate, he said. "It depends on how pushy the company will want to be - how far back they will try to go," he said.
"It would be foolish for the government to fight it in court," he added.
By Ian Talley, Dow Jones Newswires, +47 99 55 86 01, email@example.com
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