Norway's parliament, the Storting, has rejected a legislative proposal for the introduction of a tax on digital business models, labeled the "Google tax," recommending instead that the Government explore the issue of digital taxation in partnership with the OECD.
In rejecting the proposal, introduced by parliamentary commissioner Une Bastholm of the Green Party, parliament urged the Government "to significantly reinforce the work of taxation of multinational companies with little physical presence, including through active work in the OECD and support for the work of the G20."
Bastholm's proposal requested that the Government investigate options for the taxation of value creation in Norway by online platforms with no taxable physical presence in the country.
Parliament called on the Government to provide the legislature with an assessment of how Norway will follow up the OECD's work in this area no later than the fall of 2019. However, it also said that, at the same time, the Government should also assess the suitability of temporary taxes on digital companies and evaluate the possible consequences of introducing a tax on digital companies similar to that proposed by the European Commission in March 2018.
Under the Commission's proposal, the EU would impose an interim tax on the turnover of certain companies engaged in digital activities that would otherwise go untaxed, at a rate of three percent. This would apply to revenues created from selling online advertising space; created from digital intermediary activities; and those created from the sale of data generated from user-provided information.
The Commission's proposal also included a longer-term solution, under which the EU will seek to achieve international consensus under the leadership of the OECD, which would establish new digital permanent establishment rules.
In January 2018, the Government said that it is considering possibilities for the taxation of multinational companies' "value creation" in Norway, including in the area of value-added tax, although it said that it would prefer a multilateral agreement on any new measure.
In a letter to the parliamentary finance committee dated January 18, Finance Minister Siv Jensen wrote that the proposals under consideration are aimed at "global technology companies" with high volumes of sales in the Norwegian market, but with "little or no physical presence there."
However, Jensen made clear in the letter that Norway supports a multilateral solution to the problem, to avoid taxpayer uncertainty and unintended consequences.
"I think this is the key to effectively taxing multinational companies, while reducing the potential for unfortunate adjustments and cases of double taxation. Common solutions will provide more predictability for taxpayers," she concluded at the time.