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Monday, July 15, 2024

More tax trouble for the government

A new disagreement has broken out within Norway’s coalition government, involving tax rules for shipowners and efforts to woo wealthy tax exiles back to the homeland. Shipowner John Fredriksen was intrigued, but ended up disgusted after one government minister’s outstretched hand was slapped back by another.

Trade Minister Trond Giske hasn't succeeded in easing tax rules that would attract shipowner John Fredriksen. PHOTO: Views and News

“I’m sick of this,” Fredriksen told newspaper VG. “Norway has become too difficult to operate from. It’s not worth the effort. I simply can’t stand this anymore.”

Fredriksen confirmed he had considered re-flagging some of his ships back to Norwegian registry. It emerged last week that he instead has pulled out the last of the ships he still had in the Norwegian International Ships Register, and re-flagged them to the Marshall Islands.

Now Fredriksen, one of the richest men in the world and known for creating thousands of jobs in Norway, has no vessels registered in Norway. He repeated earlier complaints that Norwegian tax rules and terms “change all the time,” making it difficult to do business with any degree of predictability.

“I can’t operate here when the framework is so uncertain,” he told VG. “My system has been to initiate and build up innumerable maritime operations based in Norway, but the lack of continuity and predictability makes it hopeless to continue.”

Fredriksen himself gave up his Norwegian passport several years ago and now is a citizen of Cyprus who lives in London much of the year. Tax rules limit the number of days he’s allowed to be physically present in Norway.

The country’s trade ministry, however, started extending a hand to Fredriksen late last year, and Trade Minister Trond Giske, from the Labour Party, had hoped Fredriksen would re-flag several vessels back to Norway in return for an easing of rules that, for example, limit Fredriksen’s presence in the country.

Giske ended up meeting resistance from his own fellow ministers within the left-center coalition government, and even from within his own party. Labour Finance Minister Sigbjørn Johnsen’s department rejected Giske’s proposals, without wanting to comment directly. Other government officials feared the proposals would only apply to wealthy individuals, and be unfair.

Still others claim the real problem lies in Norway’s special tax on personal net worth, called formueskatt in Norwegian. It’s viewed by many as scaring off wealthy individuals and hindering capital creation.

“This all boils down to the debate over the fortune tax,” Professor Ole Gjems-Onstad, an expert in tax law, told newspaper Aftenposten. Norway, he notes, remains one of just three or four countries in the world that still have a fortune tax.

“We are not well-served, when people who build up businesses have to be outside the country as much as they do,” he said.

Fredriksen said he wasn’t blaming Giske for his latest tax disappointment, nor was he angry over any specific tax rules but rather the overall lack of predictability. He noted that his companies in Norway pay as much as NOK 6 billion in taxes every year, contribute thousands of jobs and value creation, and he gets little credit for that.

Views and News from Norway/Nina Berglund
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