Among the changes in the conservative coalition government’s revised state budget proposal on Tuesday is a simplification of income tax rules for foreign workers. A host of other proposals may be felt by Norwegians as well.
Finance Minister Siv Jensen and her government colleagues think current income tax rules for foreigners working in Norway for limited periods are far too complicated to understand, monitor and enforce.
The government is thus proposing a flat tax of 25 percent on gross income, with no allowances provided for deductions (called fradrag in Norwegian). That would replace the various tax rates set according to income levels, and is generally lower than what most Norwegians pay in income tax. Foreign citizens who are only in Norway to work for limited periods, however, arguably tax society at a lower rate as well.
More simplification proposed
It’s all subject to whether Parliament goes along with the minority government’s proposals, as is the case with all other aspects of the revised budget for 2018 that Jensen presented at mid-year on Tuesday. It also proposes simplifying tax rules for job benefits offered to employees (called frynsegoder or naturalytelser in the language on tax forms). Everything from company cars to the use of telecommunications paid for by employers is taxed in Norway, as is food offered to those working overtime or the cost of media subscriptions covered by employers who want their workers to be up to date. Jensen wants to streamline and simplify the regulations covering it all.
Jensen also proposed boosting the state budget by NOK 200 million for teachers and giving local governments up to NOK 3.2 billion more in funding not tied to any specific social welfare obligations. That would give local governments more freedom to allocate funding for local needs.
Sugar tax stands
No changes were proposed to a controversial new tax on sugar that took effect this year and has further raised prices on soft drinks, candy and other items containing sugar. The idea is to cut sugar consumption. The result has been much higher sales of soft drinks and sweets in neighbouring Sweden, where many Norwegians often shop because taxes and prices are much lower.
Small breweries that have been springing up around Norway, meanwhile, may get some tax relief if the government’s revised budget is approved. Jensen proposes lowering the tax on beer with alcohol content of 3.7- to 4.7 percent for breweries producing less than 200,000 liters a year. That proposal also requires approval from competition regulators of the European Free Trade Association (EFTA), of which Norway is a member.