ABSTRACT
Taxation policy can be treated as a technical problem involving the development of a rational and equitable system of taxation in order to encourage private investors to follow government policies. Macro-economic considerations have been quite important in shaping UK and Norwegian government thinking on oil taxation. The problem of extensive loop-holes in the oil taxation system was recognised in the UK well before the oil crisis, but prior to 1974 the UK government never had the legal opportunity to decide on the price base of taxation. The 1975 Oil Taxation Act was a tax frontier isolating oil company activities in the UK from activities by the same companies that take place elsewhere. A key problem in designing a taxation regime for oil companies operating within the concessionary system is that it has to combine the fiscal function and the administrative function. The remarkable fact is that the new oil taxation regimes of both countries represent important innovations in taxation policy.
