Direct and indirect taxes
In 2010, Statoil paid NOK 91.3 billion in tax on income and NOK 32.3 billion in indirect taxes. Direct and indirect taxes paid in Norway amounted to NOK 96.7 billion. Direct and indirect taxes paid outside Norway totalled NOK 27.0 billion. In 2009, Statoil paid NOK 98.5 billion in tax on income and NOK 27.3 billion in indirect taxes. The decrease of NOK 2.1 billion from 2009 to 2010 in taxes paid was a direct result of the slight decrease in revenues in 2010. The decrease in taxes paid in 2010 was mainly due to the reduction in taxes paid in Norway, the USA and Latvia. This was partly offset by the increase in tax paid in Canada, Belgium and Angola.
In Norway, oil companies currently pay income tax in six instalments per year. Three instalments are paid in the income year: on 1 August, 1 October and 1 December. The remaining three instalments are paid in the following year: on 1 February, 1 April and 1 June. The instalments paid in the income year are based on 50% of the forecast income for the year, and the estimate is made in mid-June. Over-estimated and paid amounts are compensated at market interest rates, but cannot be changed until the 1 February payment the following year.Statoil's income before tax in 2010 was NOK 131.3 billion in Norway and NOK 5.5 billion in other countries. The tax expense was NOK 85.4 billion in Norway and NOK 5.9 billion in other countries.We must pay taxes on our investments in other countries that generate production and revenues. Taxes paid to the authorities in these countries are expected to increase as our revenues increase. Direct and indirect taxes will not normally accrue during the investment phase. Since a long time elapses from a discovery until production starts up, there will be many countries in the list of activities in which we have investments but in which we do not yet pay taxes.
Production-sharing agreements (PSAs)
Under a PSA, the host government typically retains the right to the hydrocarbons in place. The contractor under a PSA normally receives a share of the oil produced to recover its costs, and it is also entitled to an agreed share of the oil as profit. The allocation of profit oil between the state and the contractors typically increases in favour of the state based upon agreed success factors. Examples of success factors include surpassing certain specified internal rates of return, production rates or accumulated production. Normally, the contractors carry the exploration costs and risk prior to a commercial discovery and are then entitled to recover those costs during the production phase. Fiscal provisions in a PSA contract are to a large extent negotiable and unique to each PSA. Contractors to a PSA are generally insulated against legislative changes in a country's general tax laws.
The value of the petroleum retained by host countries is estimated to be NOK 29.5 billion for 2010, primarily in Algeria, Angola and Azerbaijan. The value of the petroleum retained by host countries in 2009 was estimated to be NOK 18.6 billion.
Authorities in certain host countries demand payment in advance of exploration activities for the right to develop an exploration area. This type of payment is called a signature bonus. The size of the signature bonus is based on the exploration licence's presumed recovery potential and value, and the market's interest in the rights. In 2010, Statoil paid NOK 0.5 billion in signature bonuses divided between six countries and 28 licences, compared with NOK 1.4 billion in 2009.