After collecting estimates from the petroleum companies, petroleum tax for the 2024 income year is estimated at approximately NOK 352 billion. This represents a reduction of NOK 113 billion compared to the instalment tax result for 2023 which eventually ended at NOK 465 billion.

“This year’s instalment tax is still at a historical high level. The decrease from 2023 is mainly due to the increased level of investments made by the petroleum companies (larger deduction). In addition, the companies' income is affected by energy prices and the exchange rates as petroleum products from the Norwegian Continental shelf are mainly sold in foreign currencies” says Director General Nina Schanke Funnemark.

The all-time high level of paid instalment tax was in 2022 with NOK 884 billion. The high tax revenue in 2022 can mainly be explained by extreme gas prices and a weak Norwegian krone compared to USD/EUR/GBP.

The tax paid by the petroleum companies is deposited into the Government Pension Fund Global.

Assessment of Instalment Tax

Petroleum companies engaging in extraction and pipeline transportation on the Norwegian Continental shelf pay advance tax through so-called instalment tax. The instalment tax is paid in six instalments - three in the second half-year of the income year and three in the first half-year following the income year. The assessment is based on the figures (both actual and estimated) reported by the petroleum companies.

There is a revision of the instalment tax in January of the year following the income year prior to the deadline for the fourth instalment. The companies have an option to make higher payments than the assessed amounts with their second and fifth instalments. The final payment may therefore end up either higher or lower than the present assessment.

Facts About Instalment Tax

• The Petroleum Taxation Act has a special advance tax scheme called instalment tax, according to section 7 of the Petroleum Taxation Act.
  
  
• Instalment tax is assessed by the Oil Taxation Office for each income year and is payable in six instalments, three in the income year and three in the year following the income year.
  
  
• The instalment tax for each income year is assessed in June/July in the income year. The assessment is based on information collected from the companies and consists of actual figures for parts of the first half-year and of estimates for the rest of the year.
  
  
• The Oil Taxation Office may revise the instalment tax before the payment deadline of the fourth instalment. This revision is based on actual figures for most of the income year.
  
  
• The deadlines for payment of the instalment tax are respectively 1 August, 1 October and 1 December in the income year, and 1 February, 1 April and 1 June in the year following the income year.
  
  
• The companies have an option to make payments higher than the assessed amounts with their second and fifth instalments if they consider their original estimates to be too low.
  
  
• Interest is calculated when there is a discrepancy between the instalment tax for the three first and the three final instalments.
  
  
• Temporary changes in the Petroleum Tax Act for the 2020 and 2021 income years introduced negative instalment tax, which meant that the tax value of the deficit and unused uplift was paid to the companies in advance for these years. This scheme was discontinued from and including the 2022 income year.
  
  
• The tax assessment for each income year is due by 1 December of the year following the income year. There will be a reconciliation between the assessed tax/tax refund and the instalment tax.
  
  
• In April 2024, the Ministry of Finance circulated a proposal to increase the number of instalments for payment of instalment tax from six to ten. Furthermore, the Ministry has proposed to spread any additional payments over three mid-term periods, respectively the 2nd, 3rd and 4th instalments in the income year and the 5th, 6th and 7th instalments in the following year. It is proposed that the changes enter into force from the 2025 income year.

More information about petroleum tax is to be found here.