To summarise, a list of changes in the area of indirect tax can be expected, including:
- Additional reporting obligations imposed by tax authorities (as a result of moving to a destination principle and shifting the place of taxation to where the customer is located) to ensure that tax is actually calculated on each single transaction in the supply chain;
- Intensified attention from tax authorities on intra-group transactions from a transfer pricing perspective to give the tax authorities better access to valuable information about the VAT compliance status of businesses. It is expected that this will also intensify the number of indirect tax inspections by the tax authorities;
- The implementation of a standard mechanism of collecting VAT on all B2C transactions in customer location;
- An increase in the number of VAT registrations;
- An increase in the amount of VAT reporting obligations; A reduction of the threshold for when a PE is created, which will have significant impact on the VAT reporting obligations, including:
- an increase of potential fixed establishments; and
- vital changes to the current mechanism for allocation of VAT on the acquisition and supply of services (and goods).
Espen Qvist and Trond Ingebrigtsen of PwC Norway provide an overview of issues being tackled as part of the OECD’s base erosion and profit shifting (BEPS) project which are having an impact on Norwegian indirect tax policy.