OSLO, Feb 9 (Reuters) - Norway's tax rules for the oil industry, which include allowing firms to deduct 78 percent of their exploration costs from their taxable income, do not constitute state aid, the country's finance ministry told a European competition watchdog on Friday.
The competition watchdog of the European Free Trade Association (EFTA) is investigating the tax regime following a complaint by Norwegian environmental group Bellona.
"The Ministry maintains that the Norwegian rules on reimbursement of exploration costs and interest on carry forward of losses ... do not constitute state aid under Article 61 of the EEA Agreement, and are therefore in compliance with the EEA (European Economic Area) law," the ministry said in the letter.
The EEA comprises the European Union and EFTA.
EFTA includes Norway, Iceland, Liechtenstein and Switzerland, and it has been discussed as one of the options for Britain after it quits the European Union. (Reporting by Nerijus Adomaitis; Editing by Mark Potter)