The Norwegian Government is proposing to increase the effective resource rent tax rate on hydropower from 37% to 45%, with effect from the 2022 fiscal year, stating that the proposals will increase tax revenues by approximately NOK 11 billion annually
The proposals include revenue from the sale of guarantees of origin in the resource rent tax basis, but the government said this will not affect small hydropower stations in the country as they do not pay resource rent tax.
The proposals mean that, including corporate tax, the total marginal tax will be 67% for hydropower,which the government says is 11 percentage points lower than the total marginal tax for the petroleum sector. There is a proposal for a high-price contribution in addition to this.
Under current tax rules, the revenues from the resource rent tax are estimated at around NOK 53 billion in 2022, which is around NOK 45 billion more than the average for 2010–2021 (measured in NOK for 2023). It is estimated, with a degree of uncertainty, that the increase in the resource rent tax rate will increase revenues by NOK 11.2 billion accrued in 2022, which will be booked in its entirety in 2023. The proposal is not expected to involve significant administrative costs.
It is estimated, with a degree of uncertainty, that the proposal to include guarantees of origin in the resource rent tax basis will increase revenues by around NOK 1 billion accrued in 2023 and booked in 2024.