tax notes international - Tuck School of Business - Dartmouth College

He added that he doesn’t believe firms routinely discount
current taxes across the board.
Leisenring also said the proposal created a ‘‘fundamental
difference’’ from U.S. generally accepted accounting
principles during the ongoing convergence
project with the U.S. Financial Accounting Standards
Board.
An agenda paper prepared for the meeting notes
that FASB’s Financial Accounting Standard No. 109,
‘‘Accounting for Income Taxes,’’ does not include a
specific requirement or prohibition regarding the discounting
of current tax.
Leisenring took issue with the proposal’s also failing
to note the differences between U.S. GAAP and what
the IASB was considering. ‘‘It’s just so frustrating to
work on convergence projects and have these lastminute
180s come up, and it’s no wonder we don’t get
things done,’’ he said.
‘‘I do not think this is worth it during a project that
is complicated enough,’’ Leisenring said. The IASB has
said its current project to reduce the differences between
IAS 12 and FAS 109 will lead to an exposure
draft of an international financial reporting standard to
replace IAS 12 by early 2009 and to a final standard in
2010.
Norway
♦ Thomas Jaworski, Tax Analysts.
E-mail: tjaworsk@tax.org
Government Proposes Carryback Rule
For Losses
The Norwegian government on January 26 presented
a NOK 20 billion (about $2.93 billion) ‘‘crisis
package’’ that includes tax proposals that would allow
companies to carry back losses in 2008 and 2009 and
would expand the research and development credit.
Norway has not been hit hard by the global financial
crisis, but the government is concerned about rising
unemployment levels. Unemployment is expected
to reach 4 percent this year, a small number by international
standards but high by Norwegian standards.
Business and opposition politicians are disappointed
that the package does not contain more tax reductions,
but the government has concluded that most tax reduction
proposals are expensive compared with the number
of jobs they create. Therefore, most of the package’s
money would go to municipalities, public works,
and environmental investments.
The most important tax proposal would grant companies
a carryback for losses in 2008 and 2009. Under
NORWAY
the ordinary rules, such a carryback is granted only
when the taxpayer’s business is terminated. Under the
proposal, companies with profits in previous years,
back to 2006, but losses in 2008 and/or 2009 would be
granted the deduction earlier — perhaps much earlier
— than under the ordinary carryforward rules, immediately
increasing cash flow. However, the proposed
rules would apply only to losses up to NOK 5 million
for each of the income years 2008 and 2009. There is
no rule regarding consolidated companies belonging to
the same group, so presumably, one cap of NOK 5
million would apply to each company of a group. The
rules would also apply to a nonresident company doing
business in Norway through a branch.
To avoid complicated recalculations of taxable income
and taxes for earlier years, the rule is technically
framed as a cashing out in 2009 and/or 2010 of 28
percent of the losses sustained in 2008 and/or 2009, to
the extent that these losses do not exceed the taxable
profits of 2006 to 2008. The 28 percent reflects the
company tax rate for all the relevant years. As a consequence,
the right to carry forward losses from 2006 to
2008 is reduced by the same amount as the losses in
2008 and 2009, the tax value of which has been cashed
out.
The revenue loss, and the corresponding cash flow
for the companies, is estimated to amount to NOK
3.25 billion in 2008 and a similar amount in 2009.
However, because the rules imply that losses to be carried
forward to later years are correspondingly reduced,
future taxes would increase.
The other tax proposal would raise the cap on the
R&D tax credit. Currently, taxpayers can claim an income
tax credit of 20 percent of costs for R&D (and
have the difference cashed out if the credit exceeds the
calculated taxes) if the project is accepted by the Norwegian
Research Council. The cap would be raised
from NOK 4 million to NOK 5.5 million for the company’s
own research and from NOK 8 million to NOK
11 million for a project carried out by a research institution.
This proposal would reduce tax revenue, and
increase the relevant companies’ cash flow, by NOK
180 million in 2009. Unlike the loss carryback proposal,
this proposal is not limited to 2009 and 2010.
♦ Frederik Zimmer, Department of Public and
International Law, University of Oslo
TAX NOTES INTERNATIONAL FEBRUARY 2, 2009 • 401
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