NorwayTax Guide

2012

PKF Worldwide Tax Guide 2012I

foreword

A country’s tax regime is always a key factor for any business considering moving into new markets. What is the corporate tax rate? Are there any incentives for overseas businesses? Are there double tax treaties in place? How will foreign source income be taxed?

Since 1994, the PKF network of independent member firms, administered by PKF International Limited, has produced the PKF Worldwide Tax Guide (WWTG) to provide international businesses with the answers to these key tax questions. This handy reference guide provides clients and professional practitioners with comprehensive tax and business information for 100 countries throughout the world.

As you will appreciate, the production of the WWTG is a huge team effort and I would like to thank all tax experts within PFK member firms who gave up their time to contribute the vital information on their country’s taxes that forms the heart of this publication. I would also like thank Richard Jones, PKF (UK) LLP, Kevin Reilly, PKF Witt Mares, and Kaarji Vaughan, PKF Melbourne for co-ordinating and checking the entries from countries within their regions.

The WWTG continues to expand each year reflecting both the growth of the PKF network and the strength of the tax capability offered by member firms throughout the world.

I hope that the combination of the WWTG and assistance from your local PKF member firm will provide you with the advice you need to make the right decisions for your international business.

Jon HillsPKF (UK) LLPChairman, PKF International Tax Committee jon.hills@uk.pkf.com

PKF Worldwide Tax Guide 2012 II

important disclaimer

This publication should not be regarded as offering a complete explanation of the taxation matters that are contained within this publication.

This publication has been sold or distributed on the express terms and understanding that the publishers and the authors are not responsible for the results of any actions which are undertaken on the basis of the information which is contained within this publication, nor for any error in, or omission from, this publication.

The publishers and the authors expressly disclaim all and any liability and responsibility to any person, entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication.

Accordingly no person, entity or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person or firm of advisors, and ensuring that such advice specifically relates to their particular circumstances.

PKF International is a network of legally independent member firms administered by PKF International Limited (PKFI). Neither PKFI nor the member firms of the network generally accept any responsibility or liability for the actions or inactions on the part of any individual member firm or firms.

PKF Worldwide Tax Guide 2012III

preface

The PKF Worldwide Tax Guide 2012 (WWTG) is an annual publication that provides an overview of the taxation and business regulation regimes of 100 of the world’s most significant trading countries. In compiling this publication, member firms of the PKF network have based their summaries on information current as of 30 September 2011, while also noting imminent changes where necessary.

On a country-by-country basis, each summary addresses the major taxes applicable to business; how taxable income is determined; sundry other related taxation and business issues; and the country’s personal tax regime. The final section of each country summary sets out the Double Tax Treaty and Non-Treaty rates of tax withholding relating to the payment of dividends, interest, royalties and other related payments.

While the WWTG should not to be regarded as offering a complete explanation of the taxation issues in each country, we hope readers will use the publication as their first point of reference and then use the services of their local PKF member firm to provide specific information and advice.

In addition to the printed version of the WWTG, individual country taxation guides are available in PDF format which can be downloaded from the PKF website at www.pkf.com

PKF INTERNATIONAL LIMITEDAPRIL 2012

©PKF INTERNATIONAL LIMITEDALL RIGHTS RESERVEDUSE APPROVED WITH ATTRIBUTION

PKF Worldwide Tax Guide 2012 IV

about pKf international limited

PKF International Limited (PKFI) administers the PKF network of legally independent member firms. There are around 300 member firms and correspondents in 440 locations in around 125 countries providing accounting and business advisory services. PKFI member firms employ around 2,200 partners and more than 21,400 staff.

PKFI is the 10th largest global accountancy network and its member firms have $2.6 billion aggregate fee income (year end June 2011). The network is a member of the Forum of Firms, an organisation dedicated to consistent and high quality standards of financial reporting and auditing practices worldwide.

Services provided by member firms include:

Assurance & AdvisoryCorporate FinanceFinancial PlanningForensic AccountingHotel ConsultancyInsolvency – Corporate & PersonalIT ConsultancyManagement ConsultancyTaxation

PKF member firms are organised into five geographical regions covering Africa; Latin America; Asia Pacific; Europe, the Middle East & India (EMEI); and North America & the Caribbean. Each region elects representatives to the board of PKF International Limited which administers the network. While the member firms remain separate and independent, international tax, corporate finance, professional standards, audit, hotel consultancy, insolvency and business development committees work together to improve quality standards, develop initiatives and share knowledge and best practice cross the network.

Please visit www.pkf.com for more information.

PKF Worldwide Tax Guide 2012V

structure of country descriptions

a. taXes payable

FEDERAL TAXES AND LEVIES COMPANY TAX CAPITAL GAINS TAX BRANCH PROFITS TAX SALES TAX/VALUE ADDED TAX FRINGE BENEFITS TAX LOCAL TAXES OTHER TAXES

b. determination of taXable income

CAPITAL ALLOWANCES DEPRECIATION STOCK/INVENTORY CAPITAL GAINS AND LOSSES DIVIDENDS INTEREST DEDUCTIONS LOSSES FOREIGN SOURCED INCOME INCENTIVES

c. foreiGn taX relief

d. corporate Groups

e. related party transactions

f. witHHoldinG taX

G. eXcHanGe control

H. personal taX

i. treaty and non-treaty witHHoldinG taX rates

PKF Worldwide Tax Guide 2012 VI

AAlgeria . . . . . . . . . . . . . . . . . . . .1 pmAngola . . . . . . . . . . . . . . . . . . . .1 pmArgentina . . . . . . . . . . . . . . . . . .9 amAustralia - Melbourne . . . . . . . . . . . . .10 pm Sydney . . . . . . . . . . . . . . .10 pm Adelaide . . . . . . . . . . . . 9.30 pm Perth . . . . . . . . . . . . . . . . . .8 pmAustria . . . . . . . . . . . . . . . . . . . .1 pm

BBahamas . . . . . . . . . . . . . . . . . . .7 amBahrain . . . . . . . . . . . . . . . . . . . .3 pmBelgium . . . . . . . . . . . . . . . . . . . .1 pmBelize . . . . . . . . . . . . . . . . . . . . .6 amBermuda . . . . . . . . . . . . . . . . . . .8 amBrazil. . . . . . . . . . . . . . . . . . . . . .7 amBritish Virgin Islands . . . . . . . . . . .8 am

CCanada - Toronto . . . . . . . . . . . . . . . .7 am Winnipeg . . . . . . . . . . . . . . .6 am Calgary . . . . . . . . . . . . . . . .5 am Vancouver . . . . . . . . . . . . . .4 amCayman Islands . . . . . . . . . . . . . .7 amChile . . . . . . . . . . . . . . . . . . . . . .8 amChina - Beijing . . . . . . . . . . . . . .10 pmColombia . . . . . . . . . . . . . . . . . . .7 amCroatia . . . . . . . . . . . . . . . . . . . .1 pmCyprus . . . . . . . . . . . . . . . . . . . .2 pmCzech Republic . . . . . . . . . . . . . .1 pm

DDenmark . . . . . . . . . . . . . . . . . . .1 pmDominican Republic . . . . . . . . . . .7 am

EEcuador . . . . . . . . . . . . . . . . . . . .7 amEgypt . . . . . . . . . . . . . . . . . . . . .2 pmEl Salvador . . . . . . . . . . . . . . . . .6 amEstonia . . . . . . . . . . . . . . . . . . . .2 pm

FFiji . . . . . . . . . . . . . . . . .12 midnightFinland . . . . . . . . . . . . . . . . . . . .2 pmFrance. . . . . . . . . . . . . . . . . . . . .1 pm

GGambia (The) . . . . . . . . . . . . . 12 noonGeorgia . . . . . . . . . . . . . . . . . . . .3 pmGermany . . . . . . . . . . . . . . . . . . .1 pmGhana . . . . . . . . . . . . . . . . . . 12 noonGreece . . . . . . . . . . . . . . . . . . . .2 pmGrenada . . . . . . . . . . . . . . . . . . .8 amGuatemala . . . . . . . . . . . . . . . . . .6 am

Guernsey . . . . . . . . . . . . . . . . 12 noonGuyana . . . . . . . . . . . . . . . . . . . .7 am

HHong Kong . . . . . . . . . . . . . . . . .8 pmHungary . . . . . . . . . . . . . . . . . . .1 pm

IIndia . . . . . . . . . . . . . . . . . . . 5.30 pmIndonesia. . . . . . . . . . . . . . . . . . .7 pmIreland . . . . . . . . . . . . . . . . . . 12 noonIsle of Man . . . . . . . . . . . . . . 12 noonIsrael . . . . . . . . . . . . . . . . . . . . . .2 pmItaly . . . . . . . . . . . . . . . . . . . . . .1 pm

JJamaica . . . . . . . . . . . . . . . . . . .7 amJapan . . . . . . . . . . . . . . . . . . . . .9 pmJersey . . . . . . . . . . . . . . . . . . 12 noonJordan . . . . . . . . . . . . . . . . . . . .2 pm

KKazakhstan . . . . . . . . . . . . . . . . .5 pmKenya . . . . . . . . . . . . . . . . . . . . .3 pmKorea . . . . . . . . . . . . . . . . . . . . .9 pmKuwait . . . . . . . . . . . . . . . . . . . . .3 pm

LLatvia . . . . . . . . . . . . . . . . . . . . .2 pmLebanon . . . . . . . . . . . . . . . . . . .2 pmLiberia . . . . . . . . . . . . . . . . . . 12 noonLuxembourg . . . . . . . . . . . . . . . .1 pm

MMalaysia . . . . . . . . . . . . . . . . . . .8 pmMalta . . . . . . . . . . . . . . . . . . . . .1 pmMauritius . . . . . . . . . . . . . . . . . . .4 pmMexico . . . . . . . . . . . . . . . . . . . .6 amMorocco . . . . . . . . . . . . . . . . 12 noon

NNamibia. . . . . . . . . . . . . . . . . . . .2 pmNetherlands (The) . . . . . . . . . . . . .1 pmNew Zealand . . . . . . . . . . .12 midnightNigeria . . . . . . . . . . . . . . . . . . . .1 pmNorway . . . . . . . . . . . . . . . . . . . .1 pm

OOman . . . . . . . . . . . . . . . . . . . . .4 pm

PPanama. . . . . . . . . . . . . . . . . . . .7 amPapua New Guinea. . . . . . . . . . .10 pmPeru . . . . . . . . . . . . . . . . . . . . . .7 amPhilippines . . . . . . . . . . . . . . . . . .8 pmPoland. . . . . . . . . . . . . . . . . . . . .1 pmPortugal . . . . . . . . . . . . . . . . . . .1 pmPuerto Rico . . . . . . . . . . . . . . . . .8 am

international time Zones

AT 12 NOON, GREENwICH MEAN TIME, THE sTANDARD TIME ELsEwHERE Is:

PKF Worldwide Tax Guide 2012VII

QQatar. . . . . . . . . . . . . . . . . . . . . .8 am

RRomania . . . . . . . . . . . . . . . . . . .2 pmRussia - Moscow . . . . . . . . . . . . . . .3 pm St Petersburg . . . . . . . . . . . .3 pm

sSierra Leone . . . . . . . . . . . . . 12 noonSingapore . . . . . . . . . . . . . . . . . .7 pmSlovak Republic . . . . . . . . . . . . . .1 pmSlovenia . . . . . . . . . . . . . . . . . . .1 pmSouth Africa . . . . . . . . . . . . . . . . .2 pmSpain . . . . . . . . . . . . . . . . . . . . .1 pmSweden . . . . . . . . . . . . . . . . . . . .1 pmSwitzerland . . . . . . . . . . . . . . . . .1 pm

TTaiwan . . . . . . . . . . . . . . . . . . . .8 pmThailand . . . . . . . . . . . . . . . . . . .8 pmTunisia . . . . . . . . . . . . . . . . . 12 noonTurkey . . . . . . . . . . . . . . . . . . . . .2 pmTurks and Caicos Islands . . . . . . .7 am

UUganda . . . . . . . . . . . . . . . . . . . .3 pmUkraine . . . . . . . . . . . . . . . . . . . .2 pmUnited Arab Emirates . . . . . . . . . .4 pmUnited Kingdom . . . . . . .(GMT) 12 noonUnited States of America - New York City . . . . . . . . . . . .7 am Washington, D.C. . . . . . . . . .7 am Chicago . . . . . . . . . . . . . . . .6 am Houston . . . . . . . . . . . . . . . .6 am Denver . . . . . . . . . . . . . . . .5 am Los Angeles . . . . . . . . . . . . .4 am San Francisco . . . . . . . . . . .4 amUruguay . . . . . . . . . . . . . . . . . . .9 am

VVenezuela . . . . . . . . . . . . . . . . . .8 amVietnam . . . . . . . . . . . . . . . . . . . .7 pm

PKF Worldwide Tax Guide 2012 1

Norway

norway

Currency: Kroner Dial Code To: 47 Dial Code Out: 00 (NOK)

Please email EMEI Regional Director, Oliver Grosse-Brauckmann at oliver.grosse-brauckmann@pkf.com for tax contact.

a. taXes payable

COMPANy TAxCompany tax is payable by Norwegian resident companies on non-exempt income derived from all sources. Non-resident companies are required to pay tax on income sourced in Norway.

A company is treated as resident if its central management and control or head office is located in Norway and, for all practical purposes, a company registered in Norway is also considered a resident.

The company tax rate on income is 28%. The tax year is usually the calendar year, although this can be deviated from in certain circumstances. Tax is payable in three instalments. A preliminary assessment is issued after the end of the tax year corresponding to the accrued taxes not yet assessed. This tax is due in two instalments on 15 February and 15 April. The balance is to be paid within three weeks after the assessment is made public. Company tax returns must be filed by the end of March for the preceding tax year (this is extended to the end of May for electronically filed returns). It is possible to get an agreed postponement.

CAPITAL GAINs TAxThere is no separate capital gains tax. Capital gains are treated as ordinary income.

BRANCH PROFITs TAxShipping companies are not taxed on profits but when they pay dividends. There is no other special profits tax on branches of foreign companies in Norway.

sALEs TAx/VALUE ADDED TAx (VAT)VAT is levied on the sale of most merchandise and services and on imported goods and services. The VAT rate is 25% (15 % on food, 8% on passenger transport, broadcasting, cinema tickets, sports events, leisure parks and experience centre tickets and letting of rooms in hotels, motels and tourist cabins etc). Some goods are exempt but VAT on the purchase of materials and goods is still deductible. This also applies to exports, newspapers, certain periodicals and international transportation. Other areas are exempt without any credit for input tax. This is the case for health services and financial services.

FRINGE BENEFITs TAx (FBT)Both residents and non-residents are taxed on fringe benefits. The value of the benefits is taxed as the top slice of employment income. The highest marginal tax rate is 51%.

sOCIAL sECURITy CONTRIBUTIONsEmployers are liable to pay social security contributions relating to salaries and benefits paid to their employees. The fee levied is 14.1% in Central areas. Lower rates are available for certain employees in areas in the North of Norway.

LOCAL TAxEsProperty taxes in some urban areas are levied at a maximum 0.7 % of the tax value of the property.

OTHER TAxEsReal estate transactions are subject to 2.5% stamp duty. Property transferred by gift or on death is taxable at rates varying from 6% to 15%. Special taxation regimes apply to oil and gas. Tax rate for these companies is 78% (28% + 50%).

b. determination of taXable income

The taxable income of a company is determined by ascertaining assessable income and then subtracting all allowable deductions. Generally, to be deductible, losses and expenses must relate to producing the assessable income. Some items such as entertainment expenses and gifts are specifically non-deductible. Only realised expenses are deductible. Special rules apply to the categories listed below.

DEPRECIATIONBook depreciation is not allowable for tax purposes. Assets with an expected life of more than three years and costing more than NOK15,000 should be depreciated on a declining-balance method using the following rates:

PKF Worldwide Tax Guide 20122

Rate (%)

Office machinery 30

Goodwill 20

Trucks, trailers, buses, taxis and vehicles for disabled persons 20

Cars, agricultural tractors, machinery, tools, instruments etc. 20

Ships, drilling platforms, vessels, etc. 14

Aeroplanes 12

Power stations, power lines 5

Industrial buildings, hotels, restaurants 4

Office buildings 2

Technical installations in buildings 10

sTOCK/INVENTORyAll trading stock held at the beginning of the tax year and at the end of the tax year must be taken into account when determining taxable income. Stock is valued at cost without regard to real value. Work in progress and finished products are valued at direct variable cost of materials and labour. Real value is not taken into account. Accepted valuation method is FIFO not average cost or LIFO.

CAPITAL GAINs AND LOssEsSee text above.

DIVIDENDsDividends are not deductible for income tax purposes for the dividend paying company. Dividends received from other Norwegian companies are tax-exempt under the participation exemption. However, 3% of the dividendis added to the recipient’s taxable income.

INTEREsT DEDUCTIONsAll interest costs on business debt are deductible. Normally, there are no ‘thin capitalisation’ limitations (except in oil and gas production). Tax authorities can, however, make adjustments.

LOssEsLosses may be carried forward. Losses may generally not be carried back but, when a company liquidates, the losses of the year of liquidation may be offset against profits of the two preceding years.

FOREIGN sOURCED INCOMENorway has rules designed to ensure that profits sourced in low tax countries are included in the controlling Norwegian company’s taxable income. Generally, income from a foreign company will be included if 50% or more of the company is owned or controlled by Norwegians. A low tax jurisdiction applies where the tax payable is less than two-thirds of the tax that would have been payable in Norway.

INCENTIVEsGenerally, there are no special incentives, although research and development credits are granted to small and medium sized companies under qualifying circumstances.

c. foreiGn taX relief

Deductions are available for foreign tax paid or, as an alternative, a credit may be available against Norwegian tax payable on that income.

d. corporate Groups

Group companies cannot file consolidated tax returns. Under special circumstances, income can be transferred between companies residing in Norway. The requirement is that there is more than 90% common ownership of the companies.

e. related party transactions

Transfer pricing should be based on an arm’s length principle. Norwegian tax law gives the tax authorities the power to raise assessments if transactions between the taxpayer and associated companies are not based on an arm’s length principle.

f. witHHoldinG taX

Withholding taxes must be deducted from dividends paid to non-residents, although there is no withholding on dividends paid to corporate shareholders resident within the European Economic Area. Interest payments and royalties are not subject to

Norway

PKF Worldwide Tax Guide 2012 3

withholding taxes. Foreign companies and other entities within the EEA are not subject to withholding taxes.

G. eXcHanGe controls

Most exchange controls were phased out in 1990. However, all imports of capital in cash exceeding NOK25,000 should be reported to the Bank of Norway. Other transfers of capital need not be reported.

H. personal taX

Income tax is payable by Norwegian residents on income derived from all sources. Non-residents are only required to pay tax on Norwegian-sourced income. Residency is determined by domicile or where the individual has spent, or intends to spend, more than six months of the tax year. Under almost all Norwegian tax treaties, foreign-earned income is exempt from Norwegian tax. Where there is no treaty, credit for foreign taxes is given up to the amount of Norwegian tax on foreign income.

Income tax is payable on assessable income less allowable deductions. Assessable income includes business income, employment income, certain capital gains, rent and interest income. Some expenses incurred in earning the assessable income are deductible. Some actual expenses can be replaced by standard deductions.

The general combined rate of the national and municipal income taxes is 28%. A lower rate of 24.5% applies for the counties of Finnmark and Nord-Troms. A personal allowance of NOK 90,700 (2012) NOK 87,200 (2011) is available to jointly assessed married couples and for single persons with dependents. The allowance for single persons without dependents and married persons assessed separately is NOK 45,350 (2012) NOK 43,600 (2011).

OTHER TAxATIONAll income from capital is taxable at 28%. However, the value of dividends chargeable to tax is reduced by an amount representative of a risk-free return on the invested capital. This amount is 1.6% for the 2010 tax year.

An additional national income tax is payable on “gross personal income” (which includes gross income from employment or self-employment, including pensions).

With effect from 1 January 2012 the rates of the national income tax are:

Taxable income (NOK) Rate (%)

Classes 1 and 2:

0 – 490,000 0

490,001 – 796,400 9

796,401 and above 12

In addition, social security taxes are paid. Employees pay 7.8% of gross salary income. For self-employed individuals the rate is 11%.

Wealth tax is charged on the net value of assets. The rates are progressive from 0% to 1.1% including national and municipal net wealth taxes.

i. treaty and non-treaty witHHoldinG taX rates on dividends from norway

Ordinaryrates

Parent/subsidiary

(1) Parent/subsidiaryrate requirements

Non-Tax Treaty Countries: 25 25

Treaty Countries:

Albania 15 5

Argentina 15 10

Australia 15 15

Austria 15 0

Azerbaijan Republic 15 10

30% capital participation and an investment of at

least $100,000

Norway

PKF Worldwide Tax Guide 20124

Ordinaryrates

Parent/subsidiary

(1) Parent/subsidiaryrate requirements

Bangladesh 15 10 10% capital participation

Barbados 15 5 10% capital participation

Belgium 15 5

Benin 20 20

Brazil – – Domestic rate applies

Bulgaria 15 15

Canada 15 5 10% voting power

Chile 15 5 25% voting power

China 15 15

Croatia 15 15

Cyprus 5 0 50% voting power

Czech Republic 15 0 10% capital

Denmark 15 0 10% capital

Egypt 15 15

Estonia 15 5

Faroe Islands 15 0 10% capital

Finland 15 0 10% capital

France 15 0/5 25% capital/10% capital

Gambia 15 5

Germany 15 0

Greece 20 20

Greenland 15 5 10% capital

Hungary 10 10

Iceland 15 0 10% capital

India 25 15 New issues of capital only

Indonesia 15 15

Israel 15 5 50% voting power

Italy 15 15

Ivory Coast 15 15

Jamaica 15 15

Japan 15 5

Kazakhstan 15 5 10% capital

Kenya 25 15 10% capital

Korea 15 15

Latvia 15 5

Lithuania 15 5

Luxembourg 15 5 Not Luxembourg except holding companies

Malawi 5 0 50% voting power

Malaysia 0 0

Malta 15 15

Mexico 15 0

Morocco 15 15

Nepal 15 5/10 At least 25%/10% of the share capital

Netherlands 15 0

Norway

PKF Worldwide Tax Guide 2012 5

Ordinaryrates

Parent/subsidiary

(1) Parent/subsidiaryrate requirements

Netherlands Antilles 15 5

New Zealand 15 15

Pakistan 15 15

Philippines 25 15 10% voting power

Poland 15 0Company holding 10%

of the capital for at least 2 years

Portugal 15 10

Qatar 15 5 Company holding 10% of the capital

Romania 10 10

Russia 10 10

Senegal 16 16

Sierra Leone 5 0 50% voting power

Singapore 15 5

Slovak Republic 15 5

Slovenia 15 0 Company holding 15% of the capital

South Africa 15 5 25% capital participation

Spain 15 10

Sri Lanka 15 15

Sweden 15 0 10% capital

Switzerland 15 0 10% capital

Tanzania 20 20

Thailand 15 10 10% capital

Trinidad and Tobago 20 10

Tunisia 20 20

Turkey 25 20

From 1 Jan 2012 5 15

20% capital or dividend derived by the Norwegian

Government Pension Fund

Uganda 15 10

Ukraine 15 5

United Kingdom 15 5 10% voting power

United States 15 15

Venezuela 10 5 10% capital participation

Vietnam 15 5/10 At least 70%/25% of the share capital

Zambia 15 15

Zimbabwe 20 15

1 Unless otherwise indicated, the reduced treaty rates given in this column apply if the recipient company owns at least 25% of the capital in the Norwegian company.

oman

Currency: Rial Omani Dial Code To: 968 Dial Code Out: 00 (RO)

Member Firm:City: Name: Contact Information:

Norway

PKF Worldwide Tax Guide 2012 565

www.pkf.com$100