Scottish oil and gas industry companies are starting to see an improvement in performance and trade following a period of consolidation and cost efficiency measures.
This has been helped by an increase in oil prices, with the price of a barrel of Brent crude doubling in two years.
Many firms have been exploring international opportunities, as well as building on their core business in the North Sea. Work has started recently on laying the largest pipeline in the Norwegian North Sea.
The export system, including a 175-mile, record-breaking pipeline is expected to carry up to 660,000 barrels of oil from the Johan Sverdrup field into Mongstad, north of Bergen.
Statoil’s Mariner project in the UK North Sea is forecast to start production during the second half of 2018. This is a sign of the commitment and investment being focused on the North Sea.
Anderson Anderson & Brown (AAB) has seen an increase in demand for tax advice and support for UK companies operating in Norwegian waters and vice versa, when a Norwegian company is operating in UK waters.
Our highly experienced international tax team delivered a Doing Business in Norway training course earlier this year which gave companies an understanding of the tax considerations for non-Norwegian firms working in Norway.
AAB is also supporting a number of Norwegian businesses with operations in the UK. It is important to understand the movements of both your employees and subcontractors as this can trigger unexpected and unbudgeted tax liabilities.
For example, if a UK employee is working offshore in Norwegian continental waters, there will be a liability from day one to Norwegian personal income taxes and an obligation for the employer to submit a report to the Norwegian tax authorities. There are fines and penalties for late reporting. If the offshore activities exceed 30 days in any 12-month period, the company will have created a “permanent establishment”. This will in turn trigger a Norwegian corporate income tax liability and a requirement to file reports and returns. There may also be a requirement for an audit of the Norwegian accounts.
The thresholds have recently changed, with effect from January 10, and it is important for companies to assess their position and any necessity for an audit.
There are also exemptions which may be relevant and time requirements which companies should know about.
Norway’s corporate tax reporting deadline of May 31 is fast approaching for 2017 tax returns, and if you have not prepared or filed the returns yet, professional advice should be sought immediately.
AAB has a team of international tax specialists who can help with your overseas compliance requirements, and provide advice and support when operating in Norway and further afield. We are also delighted to be speaking at the Aberdeen-Norway Gateway event at Macdonald Norwood Hall Hotel on Wednesday June 6.