Norway gives shippers a cold shower

BW Gas AS A, Odfjell ASA and other Norwegian shippers declined in trading after the Oslo government demanded they pay a decade's worth of back taxes, in one case an amount equal to three times the annual profit.

The government said on September 7 it planned to scrap corporate tax for shipping companies and will seek 20 billion kroner (US$3.4 billion) in back taxes. BW Gas, the world's biggest gas-tanker operator, owes as much as 4.8 billion kroner, Bloomberg News reported. It posted a profit of 1.5 billion kroner last year.

BW Gas fell as much as 10 percent, Odfjell 4.4 percent and Wilh. Wilhemsen ASA 2.4 percent.

The tax payments will "severely undermine" BW Gas, the Oslo-based company said in a statement to the city's stock exchange yesterday. Odfjell, the largest deep-sea chemical tanker operator, said in a statement its "competitiveness will be severely hampered."

Lower taxes outside Norway have spurred companies to register new ships in other countries such as Liberia and Bermuda. The nation of 4.6 million people is the world's fifth-largest shipping country and the industry employs about 100,000 people, according to the Norwegian Shipowners' Association.

The plan was announced on September 7 after the market closed. In return for paying the back taxes, the shipping lines will get future tax exemption. Two-thirds of the back taxes will be paid to the government and the rest into a fund to finance environmental projects.