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Budget for 2014 presented to parliament – details

The Budget for 2014 was presented to the parliament on 14 October 2013. The current government is expected to resign shortly. The composition of the new government, including who will serve as the new finance minister, is not yet clear. However, on 7 October 2013, the leaders of Norway's new minority government (the "blue-blue coalition", made up of Prime Minister-elect Erna Solberg's Conservative Party and the Progressive Party) announced a common general tax platform for the next 4 years and tax reductions for individuals.

Details of the Budget in respect of direct taxation, which will generally apply as from 1 January 2014, if adopted, are summarized below.

Corporate taxation

The proposals are:

-   the corporate income tax rate will decrease to 27% (currently 28%);
-   the petroleum revenue tax on oil companies and hydropower plants will increase by one percentage point in order to keep the current level of tax revenue, despite the reduction of the general corporate income tax rate; and
-   the scope for deductions of interest payments on debt to associated companies is limited to prevent multinational companies from shifting profits abroad and reducing their taxes payable in Norway.

Individual taxation

The proposals are:

-   the tax schedule remains the same as in 2013;
-   the threshold above which the 9% surtax on personal income applies will increase to NOK 527,400 (currently NOK 509,600) and the 12% surtax will increase to NOK 857,300 (currently NOK 828,300). The rates for the surtax will remain the same;
-   the personal allowance in class 1 will increase to NOK 48,800 (currently NOK 47,150), whereas the personal allowance in class 2 will be abolished (currently NOK 94,300);
-   the minimum allowance for employment income will increase to 42% (currently 40%) of the basis and the maximum will increase to NOK 84,150 (currently NOK 81,300);
-   the minimum allowance for pension income will remain unchanged (currently 26% of the basis), whereas the maximum will increase to NOK 70,400 (currently NOK 68,050);
-   the maximum deduction for labour union contributions will increase to NOK 4,100 (currently NOK 3,850);
-   a maximum amount on the deductibility of commuting costs between home and the place of work will be introduced;
-   the mark-up in the benchmark rate for the taxation of subsidized employee loans will increase from half to one percentage point in order for the benchmark rate to be more in conformity with regular interest rates on housing loans;
-   the threshold triggering a duty to report wages paid in charities and a duty to report wages relating to work in homes, including holiday homes, will increase to NOK 6,000 (currently NOK 4,000);
-   the allowance per kilometer of work-related travel using a private vehicle will remain unchanged for travel up to 10,000km but will be increased to 3.45 for travel in excess of 10,000km;
-   the lower bracket for net wealth taxes will increase to NOK 1,000,000 (currently NOK 870,000);
-   the tax rules on zero coupon bonds will be amended. The current rules imply distribution of imputed interest over the term of the bond. The proposal entails that the imputed interest is taxed when the bond is realized; correspondingly, the imputed interest becomes deductible for the issuer at the time of maturity. Furthermore, the provisions concerning limitations on the issuing of zero coupon bonds are to be repealed; and
-   the conditional tax exemption upon the compulsory acquisition of agricultural property is expanded to include: the acquisition or upgrading of land, buildings or facilities used in the taxpayer's business activities or other income-generating activities.

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