The Norwegian Government has proposed to implement global minimum tax rules in Norway
On 24 November 2023 the Norwegian Government put forward a bill to the Norwegian Parliament to implement internationally agreed 15% global minimum tax rules in Norway. The purpose of the global minimum tax rules is to protect the tax base from profit shifting and to counteract international tax competition.
The bill is available here (in Norwegian only): Prop. 29 LS (2023-2024, Lov om suppleringsskatt på underbeskattet inntekt i konsern (suppleringsskatteloven))
The proposed Norwegian global minimum tax rules are largely in adherence with the OECD global minimum tax model rules (the Global Anti-Base Erosion Model Rules). The OECD global minimum tax model rules consist of two charging provisions: the Income Inclusion Rule and the Undertaxed Payment Rule, through which an additional amount of tax called a “top-up tax” shall be collected when the effective tax rate for a multinational group in a jurisdiction is below 15%. Under the Income Inclusion Rule the starting point is that the ultimate parent entity in the group has an obligation to pay the top-up tax calculated for the group’s low tax entities in a jurisdiction (if any). The Under Taxed Payment Rule acts as a backstop to the Income Inclusion Rule, applying only in specific circumstances where the top-up tax calculated for a jurisdiction is not brought into charge under an Income Inclusion Rule. In addition, the OECD global minimum tax model rules provide that jurisdictions may opt to implement a Qualifying Domestic Minimum Top-up Tax, which allows the top-up tax calculated to be charged by the jurisdiction where the low-level taxation occurred.
The most important proposals in the bill to implement global minimum tax rules in Norway are as follows:
- The Norwegian global minimum tax rules will be implemented in a separate act with regulations (In Norwegian: “Lov om suppleringsskatt på underbeskattet inntekt i konsern (suppleringsskatteloven)”).
- The proposed rules will apply to both multinational groups and large-scale domestic groups with consolidated group revenues of EUR 750 million or more in at least two of the four fiscal years immediately preceding the tested fiscal year. Compared to the OECD global minimum tax model rules, the scope of the Norwegian global minimum tax rules is extended to include purely domestic groups in order to ensure that the rules are in adherence with the EEA Agreement.
- The bill proposes to implement the Income Inclusion Rule and a Qualifying Domestic Minimum Top-up tax in Norway with effect from 2024 for financial years starting after 31 December 2023.
- The bill does not include a proposal for an Undertaxed Payment Rule. However, the Ministry of Finance has stated that it will return with a proposal for implementation of the Undertaxed Payment Rule at a later stage. Considering the timeline in the EU Directive, it can be expected that Norway will implement this rule with effect from 2025.
This article was first published in IBFD
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