On 12 December, the Standing Committee on Finance and Economic Affairs (“Finanskomiteen”) announced agreement on adoption of the government’s proposal to introduce resource rent tax on onshore wind generation.
The agreement did not include all parties represented in the parliament but by a broad coalition.
Details of the agreement will be public on 15 December, but the committee has made available some key changes from the original government proposal:
- The effective tax rate is reduced from the 35 % rate proposed by the government to 25 %.
- For new wind farms, the tax value of negative resource rent tax will be paid out when operation commences.
- For existing wind farms, there would be an additional step-up of tax book values for resource rent tax purposes of 40 %. Under these transitional rules, the tax book values would be limited to 85 % of historic investments. Depreciations would be allowed on a linear basis over 5 years.
While there is an agreement to establish a cash flow-based tax for new wind farms leading to a potential tax refund, consensus seems to be that negative resource rent tax will be carried forward for existing wind farms as suggested in the original proposal.
The changes represent a significant improvement on the government proposal in that the tax becomes more neutral and that the transitional rules for existing wind farms are more beneficial. It remains to be seen whether this is sufficient to incentivise investment in wind projects and whether the position for existing wind parks are sufficiently improved.
Given the broad coalition between the parties in government (Arbeiderpartiet and Senterpartiet) and Høyre, Venstre, Miljøpartiet De Grønne and Kristelig Folkeparti, it is likely that the tax will be approved by the parliament as proposed by the committee.
