Shipping companies in Norway slammed a proposal for a new shipping tax system, saying it would cost them heavily and calling it a betrayal of a 1996 deal meant to keep them competitive and under the Norwegian flag.
Shares in shipping group BW Gas opened down more than 9 percent, and traded down 8.8 percent at 74.50 crowns by 0720 GMT while peer Odfjell was off 4.0 percent at 109 crowns.
The Labour-led government presented the plan on Friday to introduce a system akin to the tonnage tax in other European countries and levy taxes on undistributed profits retained by the companies, which were shielded under the 1996 deal.
Shipping companies said the proposal to tax those undistributed profits would amount to saddling it with huge back taxes for the past 10 years, severely reduce its ability to invest and tarnish Norway's image with investors abroad.
"We are sorry to realise that entering the current tax system in 1996 on the trust that we would enjoy a stable and competitive business climate in Norway for our industry seems to have been a wrong decision," shipper Odfjell said.
The Shipowners' Association called for a meeting on the proposal with Prime Minister Jens Stoltenberg. The row blew up on the eve of municipal elections across Norway on Monday, seen as a test of support for Stoltenbrg's Left-Centre coalition.
Odfjell said that the change would increase its tax liabilities and reduce its equity by about 1.3 billion Norwegian crowns ($225.1 million) and cut its equity-to-assets ratio to 23.6 percent from 33.4 percent. Odfjell said the change would reduce its ability to invest in renewal of its fleet by close to $1 billion and said it would severely hamper its competitiveness.
Gas shipper BW Gas said on Monday that the proposed tax change would cost it between 3.8 billion and 4.8 billion Norwegian crowns (($657.9 million-$831 million) in tax on undistributed earnings depending on the transition rules. That would be equal to 20-25 crowns per share, said GW Gas. "If approved, the proposal will have a serious effect on BW Gas," it said in a statement.