Agreement in the Norwegian Parliament on the introduction of resource rent tax on onshore wind power from 2024
On December 15, The Standing Committee on Finance and Economic Affairs presented its recommendation to the Parliament after reviewing the government's adjusted bill on resource rent tax on onshore wind power from 2024.
The Committee’s recommendation contains several key changes in favor of the onshore wind power plants compared to the government’s adjusted bill, which include:
- The effective tax rate shall be 25 %, i.e. lower than the adjusted bill of 35 %.
- New power plants that are not in a tax position will receive payment of the tax value of their negative resource rent income in the year following the income year. Until payment, negative resource rent income will be carried forward with an interest supplement. This change may be subject to the general prohibition of state aid in the EEA Agreement and therefore requires approval from the ESA. This is in contrast to the adjusted bill where negative resource rent tax was only allowed to be carried forward with an interest supplement.
- For existing power plants, the input value is given a markup of 40 %. However, the input value cannot be higher than 85 % of the historical cost of the investments. The input value is written off linearly against the resource rent tax over five years. This is in contrast to the adjusted bill where historical investments were to be depreciated on a declining balance basis (typically at a rate of 4 %).
- The recommendation does not involve changes in the excise duty on production.
It is the governing parties (Labour Party and Centre Party), the Conservative Party, the Liberal Party, the Christian Democratic Party, and the Green Party who have reached an agreement on the committee’s recommendation. As a result of the broad agreement in the committee, it is expected that the Parliament will pass legislation in line with the committee’s recommendation. The Parliament will debate the recommendation form the Committee and vote at the December 19.
Investment in renewable energy in Norway has fallen in recent years. Therefore, it is particularly positive that the recommendation put forward payments in case of negative resource rent income. This could help stimulate new investments.
For existing facilities, the markup of the input values by up to 40 % and linear depreciation is positive, but to fully compensate for the economic consequences of the resource rent tax, full deductions should have been given for existing facilities, in the same way as for new facilities.
To read the Committee’s recommendation click here (Norwegian only)
To read the government’s press release about the proposal for the adjusted bill on resource rent tax on onshore wind power from 2024 click here.
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