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Norway: Economic, tax measures to address coronavirus (COVID-19) situation

Norway: Economic, tax measures to address coronavirus

The Norwegian government introduced initial measures that are intended to support employment and help businesses address the economic situation resulting from COVID-19.

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As part of a larger package, the government will establish two state-backed loan and guarantee schemes in the total amount of NOK 100 billion (approximately U.S. $10 billion) in an effort to provide liquidity for Norwegian enterprises.

The government is also focused on certain targeted measures in three phases.

Phase one includes direct and indirect tax measures intended to deal with liquidity, such as:

  • Loss-making companies in 2020 could, subject to certain conditions, carry back losses for that year against the two previous years’ taxable profits. Relief would be allowed for up to NOK 30 million of corporate losses in 2020. Read TaxNewsFlash
  • Payment of the second instalment of advance tax payment for companies, originally due 15 April, would be postponed. The new deadline has not yet been announced.
  • The value added tax (VAT) “lower rate” would be temporarily reduced from 12% to 8%. This is a temporary arrangement to apply for a limited time-period, but would be retroactive from 1 January 2020.
  • Payment of VAT for the first term 2020, with original due date 14 April, would be postponed. The new deadline has not yet been announced.
  • An extension of time for traders and certain other business owners to make the first instalment of advance payment of tax for 2020 would be provided to 1 May 2020 (from 15 March 2020).
  • Owners of loss-making companies in 2020 could postpone payments of net wealth tax in respect of the value of the companies. Advanced payments of wealth tax could also be reduced accordingly. This measure is intended to reduce the need for, among others, family-owned businesses to distribute dividends to owners to cover the wealth tax.
  • The number of days employers are obliged to pay salaries to workers in case of temporary lay-offs would be reduced from 15 to two days. The intention is for this temporary measure to improve employers' liquidity and help avoid massive lay-offs.
  • A measure would suspend the tax on air passengers for flights from 1 January 2020 until 31 October 2020.

Phase two is expected in the near future and will reflect further targeted measures towards sectors and businesses affected by the virus outbreak. The government is prepared to respond quickly with new measures.

Phase three is not yet certain but, if needed, may reflect broader measures to sustain economic activity.


KPMG observation

Businesses that may anticipate significantly lower profits in 2020 (compared to previous years) may want to consider applying so as to reduce the amount of advance payment of tax—possibly to zero.


For more information, contact a KPMG tax professional in Norway:

Per Daniel Nyberg | +47 40 63 92 65 | per.daniel.nyberg@kpmg.no

Thor Leegaard | +47 40 63 91 83 | thor.leegaard@kpmg.no

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