The Norwegian shipping industry has attacked government plans to change the tonnage tax regime.
On September 7, the government announced substantial changes to the rules in the national budget for 2008. Under the present system, income from the operation of vessels is not taxed annually, but deferred until the company is liquidated or leaves the tonnage tax system.
The government has proposed companies using the tonnage tax system should pay two-thirds of the deferred taxes due by January 1 2007 over a period of 10 years. The government has estimated this will bring in about $2.5 billion.
The shipping companies will be allowed to use the remaining one third of the deferred tax liability to offset in environmental investments.
The shipowners' association has protested to the government about what it sees as a retrospective tax.
"The government is on the verge of ruining Norwegian shipping. Prime Minister Jens Stoltenberg cannot possibly have understood the dramatic consequences that the proposal of the new shipowner tax plan have brought about," said Marianne Lie, director general of the Norwegian Shipowners' Association.
BW Gas,one of the largest energy companies in Norway said the government had broken faith with the industry.
"We chose to remain in Norway on the understanding that this would be a stable long-term system under which to operate," said Jan Håkon Pettersen, the company's chief executive. "This latest proposal to cancel the current taxation system would be a dramatic reversal of that understanding, in spite of us honouring our commitment to invest in Norway. We hope that the final details of the proposal will take into account the impact not only on individual companies, but on the entire Norwegian maritime cluster and the image of Norway as a dependable investment location," he added
The existing tonnage tax system was aimed at retaining shipping companies and ensuring Norway remained competitive as an international shipping location.
"The proposed tax regime will make the Norwegian tonnage tax system similar to the tax regimes available for the industry in the EU," said Hans Hemnes, of PricewaterhouseCoopers in Norway. "This means that shipping income will be tax exempt on a permanent basis."
The budget proposals will go before the Norwegian parliament in early October. It remains uncertain how the parliament will vote on this issue.
