Hundreds of thousands of Norwegians are likely to be devoting at least part of this weekend to the annual ritual of filing their income tax forms by midnight April 30. It’s become so electronically easy, though, that tax officials worry too many taxpayers aren’t bothering to check their returns at all.
Tax forms in Norway have become increasingly automated in recent years. All employers, banks, stock brokerages and other financial institutions have been electronically reporting employees’ and customers’ data to tax authorities for years, as have charitable organizations that have received deductible donations. Even the tax values of real estate have already been determined, based on registered holdings and adjusted in accordance with average property value appreciation rates.
It all means that many individuals’ tax forms are already filled out in advance and electronically sent to taxpayers for verification as well. All the taxpayer needs to do in many cases is check them over and click OK.
More simplification for small business owners
This year things also got a lot easier for small business owners and sole proprietors. They’re now required to file electronically, with no paper returns accepted as of this year, but many will no longer need to search electronically for the various forms that were standard in years past. Now there’s a new Næringsrapport skatt (Business Tax Return) that tax authorities believe can be used by at least 100,000 small business owners in Norway, from hairdressers to consultants, photographers, musicians, physiotherapists, mechanics and many more.
An online self-test tool found on the tax agency Skatteetaten’s website, available in both Norwegian and English, can help small business owners determine whether they qualify to use it. And then it’s mostly a matter of answering questions along the way, with tips and background information offered in little boxes that pop up on the screen. As long as the sole proprietor already has tallied up all revenues and expenses, with accompanying receipts, the new Business Tax Return can be a breeze to fill out.
“Time-consuming reporting to the public sector is a cost for businesses,” said Finance Minister Siv Jensen when the return was released in time for this year’s tax season. “The government wants start-up founders, business owners and employees to use their time on creating value, and less time on filling out forms. It should be simple to start and run a business that provides profitable employment. We want dialogue with the (public) sector to be easy. The Business Tax Return is an excellent example of this in practice.”
Pilot group positive
A pilot group that tested the new electronic form before it was launched on March 31 was overwhelmingly positive. Fully 88 percent said the return was “easy” to use, and 95 percent even said they liked using it. Sole proprietors must also still file their personal tax returns after completing the Business Tax Return, but the process for the self-employed is still pared down considerably.
“We think it will save time and bother for several thousand small business owners in Norway,” said state Tax Director Hans Christian Holte. “This is one of our projects to simplify for business.” He noted that since this year also marks the first time small business owners must submit their tax returns electronically, “we are going to make it as easy as possible to do it right.” While individuals must file by April 30, small business owners have until May 31.
Holte and his colleagues still felt a need to urge taxpayers, especially young ones, to check that their electronic returns have been filled out correctly and approve them – not least to make sure they’re not overlooking any deductions to which they’re entitled. The state tax agency was also running ads in April reminding tax payers who have changed jobs or domestic status, had children or fallen ill that their tax returns can be affected. No one, they claimed, should pay more tax than required.
A new survey conducted by research firm Ipsos MMI for Norway’s largest bank, DNB, determined that Norwegians over age 60 were the best at checking that the figures on forms already filled out were correct. Fully 97 percent responded that they carefully monitored their tax returns, compared to 81 percent of those aged 18 to 29. Silje Sandmæl, consumer economist at DNB, worries that young taxpayers are relying too heavily on automation.
“It’s great that tax returns have become electronic and simple, but the simplification can also make some taxpayers lazy,” Sandmæl told Norwegian Broadcasting (NRK) on Thursday. “You should understand your tax return, and make sure it’s correct.”