NORWAY Law and Practice Contributed by: Bernhard Getz-Jeffreys and Johannes Wiegaard, Ro Sommernes Advokatfirma AS
9.2 Government Policy and Objectives Approach Norway follows the OECD’s BEPS guidelines to com - bat tax evasion and ensure a fair and efficient tax system that prevents multinational companies from exploiting legal loopholes. As an active participant in the BEPS 2.0 initiative, Nor - way supports both Pillar One, which reallocates taxing rights to reflect where companies generate value, par - ticularly in the digital economy, and Pillar Two, which establishes a 15% global minimum tax to curb tax competition and secure fair revenue for all nations. Pillar Two is already in force in Norway. Pillar One will require changes to national legislation and tax treaties. These measures will impact multi - national companies operating across jurisdictions, ensuring they contribute fairly to the tax base. To align with these reforms, updates to the Tax Admin - istration Act and the Norwegian Tax Act will be neces - sary, reinforcing Norway’s commitment to maintaining a sustainable and equitable taxation system. 9.3 International Tax In Norway, international tax has sparked public inter - est, especially after scrutiny of tax evasion and profit shifting. The government is taking a proactive stance on the OECD’s BEPS measures, aiming for fair taxation. This commitment is seen in laws such as the cut-through rule and CFC taxation. The Norwegian tax administra - tion has adapted its practices to prevent tax avoid - ance and ensure that multinational companies pay tax in Norway. This adaptation is evident in the prepara - tory work for the Tax Administration Act (Ot.prp. nr. 70 (2008–2009)), where international co-operation is emphasised as a key instrument for combating tax evasion. 9.4 Competitive Tax Policy Objectives Norway’s position is to have its tax policy aligned with international standards. The nation strives to strike a balance between international obligations and a com - petitive tax environment.
its adherence to tax regulations. On-site audits are more frequent for high-risk companies. The Norwegian tax administration employs risk assessment methodologies to identify entities or indi - viduals deemed to be at elevated risk of misreporting or tax evasion. Consequently, certain entities are sub - jected to regular audits, while others are assessed as lower risk and consequently audited less frequently. 9. BEPS 9.1 Adoption of BEPS Recommendations To address tax evasion and avoidance, Norway has adopted several recommended changes from the OECD’s BEPS project, including: • The general anti-avoidance rule prevents the abuse of tax treaties by allowing tax authorities to inter - vene in transactions primarily designed to obtain tax benefits without genuine economic activity (BEPS Action 6). • The CFC tax rules (Nw: NOKUS) lead to the imposition of Norwegian income tax on income of foreign companies domiciled in low-tax countries controlled by Norwegian companies or individuals regardless of distribution (BEPS Action 4). • The PPT has been implemented in a number of tax treaties through the MLI to prevent abuse of tax treaties for tax planning (BEPS Action 6). • Country-by-country reporting has been introduced to impose upon multinational companies an obli - gation to report their income in each country of operation to better assess profit shifting to low-tax countries (BEPS Action 13). • Increased documentation requirements for transac - tions between related parties to avoid artificial pric - ing for tax avoidance have been introduced (BEPS Action 13). • New transfer pricing guidelines and a withholding tax on royalties have been implemented to prevent profit shifting via intangible assets being trans - ferred to low-tax countries to avoid taxation (BEPS Action 5). • Rules to limit deductions for interest have been implemented to prevent excessive debt financing being used to reduce tax (BEPS Action 4).
420 CHAMBERS.COM
Powered by FlippingBook