Norway will implement new rules for taxation of large multinational enterprises

Today the Government put forward a Bill to the Norwegian parliament to implement internationally agreed rules on global minimum tax. This will deter profit shifting and ensure large business groups pay at least 15 per cent tax on their profits. The rules have been developed in an extended OECD collaboration with over 140 jurisdictions and will apply in Norway from 1 January 2024.

“This is a historic breakthrough in international tax cooperation. For the first time, we have an effective means of preventing large profits from being shifted out of Norway to countries with a low tax level. A correct tax base is important for the funding of vital public services”, says Minister of Finance Trygve Slagsvold Vedum (Centre Party).

The rules will apply to international companies with consolidated group revenues exceeding EUR 750 million. The ruleset ensures these groups pay a minimum effective tax rate of 15 per cent on their profits in all countries. The purpose is to protect the tax base from profit shifting and to counteract harmful international tax competition.

The proposal is a result of long-term international collaboration to change the framework for taxing large, multinational enterprises. The collaboration takes place in the OECD Inclusive Framework, an international cooperative body with over 140 member countries and jurisdictions. The Inclusive Framework has collaborated to reach consensus on reforming international tax rules, with the aim of finding effective methods to tackle the challenges arising from the digitalisation of the economy.

In 2021, political agreement was reached on a solution consisting of two parts, referred to as pillars. It is pillar 2 of this two-pillar solution which the Government now proposes to implement into Norwegian domestic law, with the intention to enable the global minimum tax level. The Bill is based on model rules drawn up by the Inclusive Framework.

“The new rules remove incentives for multinationals to shift profits, and ensure that the largest groups pay correct tax, regardless of where in the world they move their profits. This reform will also benefit Norway and Norwegian public services”, says the Minister of Finance.

According to the OECD, 14.5 per cent of the total profits in the world's multinational corporations is taxed at an effective tax rate of less than 5 per cent. Over 37 per cent, corresponding to over 2,400 billion dollars, is taxed at a tax rate lower than 15 per cent. Undertaxed income exists not only in low-tax jurisdictions. More than half (56.8 per cent) is located in high-tax countries.

The Government proposes to implement global minimum tax rules in Norway from 2024. This correlates with the timetable in many other countries planning to introduce the rules.

Read more: