Norway Revamps Corporate Tax Regime: Update from Nair & Co. International Tax Compliance Services Team (Sunnyvale, CA) - With an aim to give a boost to its economy, the Norwegian government plans to array of change to it corporate tax regime say says Nair & Co. which provides international tax consulting for companies expanding overseas. The corporate tax rate will be lowered, the tax credit scheme for R&D will be increased and a special first year depreciation for machinery will be introduced. It should be noted that the government will submit these proposals to the Parliament in the 2014 tax bill this autumn. The Norwegian government which announced changes to the Norwegian tax system last month recommended this in the Revised National Budget for 2012, in order to strengthen the competitiveness and profitability of Norwegian businesses, and stimulate investments in the mainland economy. Key Changes: Norwegian Corporate Tax System
Tax rate Reduced: Effective from January 1, 2014 the corporate tax rate has been reduced to 27 % from 28%. The reduced rate will be applicable for private limited companies, public limited companies and selfemployed persons. Though a small reduction compared with other European countries, the authorities maintain that this initial step may pave way for wider changes in the corporate tax regime. Depreciation Allowance Increased: The provision for depreciation allowance regarding investments cost in machinery, cars, equipment, etc. is proposed to increase by 10 % in first year from 20 % to 30 %. It must be noted that the rate will remain at 20 % for the subsequent years. Research & Development (R&D) costs: “Skattefunn”, tax credit scheme is suggested to be increased by 100 MNOK. It is expected to stimulate R&D spending of the organizations; however in practice the quantum of effect in increasing R&D expenditure is not clear because of the limited amount proposed.
The authorities have also recommended restricting certain deductions for investments in oil & gas companies offshore by self-employed persons, private and public limited companies. This tax proposition for the oil & gas industry will take effect immediately. Additionally, it must be noted that the proposed tax reductions is not likely to compensate for the additional tax levied on group companies having intercompany loans. Subscribe to regular International Business Services alerts from Nair & Co. For more information about doing business overseas or to know more about our international tax consulting team please contact us. International Business Guide (IBG) our online platform for companies wishing to optimize their multinational operations or who would like to have country specific business information - Click Here.
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