Greenland is full of possibilities – and regulations
Greenland is rapidly rising to become one of the main areas of interest for hydro carbon related companies. Lately Greenland has completed a prequalifying round for the Baffin Bay that is set to be offered in 2010. The Baffin Bay is placed on the West coast of Greenland towards Canada and covers an area of approx. 151.000 square kilometres, which are divided into 14 blocks of varying size. The Greenland authorities call the interest for the Baffin Bay overwhelming. As many as 13 international oil companies have shown interest in the field by entering the process of preapproval for the role as operator.
Ever since the interest for Greenland’s mineral sources has started the Greenlandic authorities have been updating, reinventing and creating laws that concern this area and the surrounding businesses. This means that anyone working within the hydro carbon field needs to be aware of the compliance issues that arise, when business is done in and around Greenland.
New tax laws proposed
Currently a new law has been proposed that changes the view on limited tax liability for sub-suppliers of hydro carbon companies. If the law proposal passes it can have a great impact on sub-suppliers since the limited tax liability arises after only 30 days in any 12 month period. The new law on Hydro Carbon taxation will have effect from 1st January 2010.
Furthermore the changes will also have effect on individuals and their employers working in Greenland and offshore Greenland. Salary during work in and around Greenland will now ultimately be considered to be salary income. With the new law comes an extensive requirement to report and pay taxes for the companies that are employing the personal. Failing to be in compliance can result in penalties.
Partner Jan Dalgaard from UNITED TAX NETWORK adds to the new law proposal: “Greenland, who recently became independent, is one of the countries in the world with the least amount of double tax agreements. This means that there is no government protection in form of tax treaties, when working in and around Greenland. As far as we know the Greenlandic government is determined to enter into more double tax agreements, but until that happens it is vital to know the impact of being taxed two places and – not least – how to resolve it and build it into the project costs.”
These are just some of the recent changes proposed and we are expecting many more to come in future, which can have an impact on how to conduct business in Greenland in order to make the most of the opportunities and furthermore to stay in compliance with the local regulations.
