On 12 October 2017, the Norwegian Government published its proposal for the 2018 Fiscal Budget. The following tax measures are proposed in the Budget.
- The government has proposed to reduce the general corporate tax rate from 24% to 23% with effect from 2018. For companies in the financial sector, the rate will remain 25%.
- There will be an increase of the special tax on petroleum income from 54% to 55% due to the reduction of the corporate income tax rate.
- A limitation on the right to deduct tax losses in cases where dividends are tax-free under a tax agreement. The amendment would come into force with retroactive effect as of October 12, 2017.
- A possibility to deduct corporate contributions to companies in the European Economic Area (EEA) with tax losses from previous transactions in Norway. It is proposed that the changes take effect from 1 January 2018.
- Specific changes to the rules on the limitation of interest expenses, both in relation to the amount of interest expenses that can be carried forward by partnerships with tax losses (from 2017), as well as the definition of financial institutions (with effect from the income year 2018).
- On 16 March 2017, the Ministry of Finance proposed an amendment to the Norwegian law requiring a company incorporated in Norway to be considered as resident in Norway. In addition, it was suggested that companies with “place of effective management “in Norway should also be considered as resident in Norway. By the end of the consultation period (16 June 2017), the Ministry of Finance had received a number of consultation contributions. The Fiscal Budget does not contain the expected amendments to the domestic tax residency rule. The Norwegian Government has announced that these rules are still under review and that it will revert soon on these issues.
The proposal will now be discussed by the Norwegian Parliament and subject to possible amendments. It is expected to be approved in December 2017.
