Worldwide transfer pricing reference guide 2014

Norway (continued)
Frequency of tax audit and transfer pricing scrutiny by the tax authority
The likelihood of a full corporate tax audit is in general low. The likelihood of a separate transfer pricing tax examination is however,
considered high. For both separate transfer pricing tax examinations and full corporate tax audits, it is likely that the tax payer’s related
party transactions will be scrutinized and challenged.
The NTA has a strong focus on intercompany transactions and has established a transfer pricing network comprised of major tax offices,
including the Directorate of Taxes. This focus continues to increase, in line with the rising number of dedicated transfer pricing tax
inspectors within the NTA.
The NTA selects companies for audit based on the submitted form RF 1123 and the tax return. Companies are also selected through
initiatives by the NTA targeting specific transactions, e.g., business restructuring or transactions involving IP. If selected, the first step is
for the taxpayer to submit its transfer pricing documentation for review.
Based on the initial review, the company is selected for audit if the documentation does not provide sufficient information and answers
about the internal transactions and the profitability of the company.
Currently any company with a low margin or losses transacting with a foreign related party has a high chance of a tax audit. In addition,
year-end adjustments are rarely accepted, and this is often used as an argument by the NTA to claim that the result is not arm’s length.
The NTA has communicated that financial transactions in general will be targeted for audit.
APA opportunity
APAs are currently unavailable in Norway. A transfer pricing exemption exists on the sale of gas under the Petroleum Taxation Act.
Expected reaction to OECD Report on BEPS
• IP: It has been communicated that the NTA is participating in, and awaiting the outcome of the OECD’s work on IP. It is assumed that the
NTA will accept and adhere to OECD’s new guidelines on IP, when finalized and implemented.
• Country-by-Country Reporting: From previous cases, the NTA exhibits an interest in reviewing the complete value chain in relation to
tax audits, including requesting information for related parties domiciled in foreign jurisdictions. It is expected that the NTA will closely
monitor the outcome of this initiative.
• Documentation Masterfile: Based on the information provided in the OECD White-paper on transfer pricing documentation, it appears
that the Norwegian transfer pricing documentation rules are in line with the proposed Masterfile concept. As such, it is expected that the
NTA will accept the OECD proposal.
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