Today, the Norwegian Government published its prosposal for a National Budget 2021.
October 7 2020, Monica Jotun
As discussed earlier, a Norwegian withholding tax at 15 per cent is proposed to be levied on certain non- dividend payments to related companies (more than 50% ownership/voting rights) resident in low-tax countries outside the EEA.
The proposed rule will decrease the Norwegian “tax-leakage” allowing the escape of interest-, royalty- and certain lease payments out of the country, free of tax. However, withholding tax may to a large extent be limited by way of double tax treaties. In many cases, such treaties will limit the withholding tax base to the amount exceeding an arms-length payment.
The proposed rule is expected to require extensive transfer pricing expertise.
Further, a cashflow based taxation will substitute today’s resource rent taxation of hydropower resources. As part of this, an extensive amount of the annual investments will become deductible immediately. The deductibility of the plant itself, however, will still be limited to the annual depreciations. Providing a more predictable economy for the hydropower industry, the proposed regime is aimed at increasing the liquidity and stimulate hydropower investments.
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