Petroleum taxation contingent on counter-factual investment behaviour

Petter Osmundsen, Magne Emhjellen, Thore Johnsen, Alexander Kemp, Christian Riis

Research output: Contribution to journalArticle

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Abstract

Petroleum administration can be regarded as a principal-agent problem. The government allocates exploration and production rights to petroleum companies on behalf of the population. The government is the principal and the companies are agents. With the aim of capturing revenue for the state, the government devises a petroleum tax system which takes account of the investment decisions made by the companies, while acknowledging for the fact that the companies may report strategically to the government. An important issue is how tax deductions are to be treated in investment analysis. A discrepancy arises here between assumptions made in some areas of tax theory and the actual investment analyses conducted by the companies. Tax theory has given rise to discussion and controversial tax proposals for the petroleum sector in Norway, Denmark and Australia. It led, for example, to reductions in tax-related depreciation for the Norwegian petroleum industry in May 2013. The article reviews this tax debate and analyses the implications of basing tax design on counter-factual investment behaviour.
Original languageEnglish
Pages (from-to)195-213
Number of pages24
JournalThe Energy Journal
Volume36
Issue numberSpecial Issue I
DOIs
Publication statusPublished - Dec 2015

Fingerprint

Taxation
Tax
Petroleum
Investment behavior
Government
Tax deduction
Investment analysis
Discrepancy
Investment decision
Denmark
Petroleum industry
Tax system
Revenue
Norway
Depreciation
Principal-agent problem

Keywords

  • petroleum taxation
  • uplift
  • tax depreciation
  • special tax
  • principal-agent problem

Cite this

Osmundsen, P., Emhjellen, M., Johnsen, T., Kemp, A., & Riis, C. (2015). Petroleum taxation contingent on counter-factual investment behaviour. The Energy Journal, 36(Special Issue I), 195-213. https://doi.org/10.5547/01956574.36.SI1.posm

Petroleum taxation contingent on counter-factual investment behaviour. / Osmundsen, Petter; Emhjellen, Magne; Johnsen, Thore; Kemp, Alexander; Riis, Christian .

In: The Energy Journal, Vol. 36, No. Special Issue I, 12.2015, p. 195-213.

Research output: Contribution to journalArticle

Osmundsen, P, Emhjellen, M, Johnsen, T, Kemp, A & Riis, C 2015, 'Petroleum taxation contingent on counter-factual investment behaviour', The Energy Journal, vol. 36, no. Special Issue I, pp. 195-213. https://doi.org/10.5547/01956574.36.SI1.posm
Osmundsen, Petter ; Emhjellen, Magne ; Johnsen, Thore ; Kemp, Alexander ; Riis, Christian . / Petroleum taxation contingent on counter-factual investment behaviour. In: The Energy Journal. 2015 ; Vol. 36, No. Special Issue I. pp. 195-213.
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