A new constitutional crisis-law in Norway!

Today, on 21 March 2020, the Norwegian Parliament granted the Norwegian government the legislative power to pass urgent changes to approxmiately 60 Norwegian laws for a period of one month. Whenever relevant, the government shall confer with the business industries and labour organisations affected. The legislative power will only apply to changes that hurry too much to be decided upon by way of voting in the Parliament. The changes can be cancelled subsequently by 1/3 of the Parliament. We presume that the courts may decide upon the validity of decisions made by the government in accordance with the crisis-lav.

The originally suggested crisis-law has been broadly critisized. The proposal was then modified and now the Parliament has reached a consensus. A central modification was the time limitation of the law, which was reduced from 6 months 1 month.

The government has already proposed a large number of measures, out of which we outline the main content below:

Further to the sudden drop in oil price and the Norwegian currency, the coronavirus is expected to cause a severe setback of the Norwegian economy. The Central Bank of Norway has lowered the base rate to 0.25% and several other monetary measures have been taken, i.a the issuance of F-loans/ guarantees of 50 billion NOK to the banks, the setup of a national bond fund of 50 billion NOK, a recommended decrease of the reverse cyclic capital buffer from 2.5 to 1% and an increased daily fx sale. 

More budget allocations to the health sector will be made in order to ensure medication, equipment and resources. 

Additionally, through 31 October 2020, the unemployment benefits will be publicly financed from the third day of redundancy (a decrease of the employers´duty from 15 to two days).

Moreover, the Ministry of Finance has suggested some fiscal measures in order to soften the decline, which were supported by the Standing Committee on Finance today:

A decrease of the low VAT rate from 12% to 8% on i.a personal transportation, accommodation and cultural events, applicable as of 20 March 2020 through 31 October 2020. Originally the lowered rate would apply as of 1 January 2020, however, that would raise some practical issues related to excess VAT.

Postponed due date for the first advance tax instalment for self-employed persons from 15 March 2020 until 1 May 2020.

Postponed due date for the first VAT instalment from 14 April 2020 until 10 June 2020.

Postponed due date for the second advance tax instalment for companies, including the financial acitivity tax on profits, from 15 April 2020 until 1 September 2020.

Postponed due date for the Employer´s national insurance contribution, including the financial acitivity tax on salary, from 15 May 2020 until 15 August 2020.

The postponements in question will be granted automatically, according to the tax authoritites.

Finally, these suggestions have also been made:

A decrease of the national insurance contribution by 4 percentage points for 2 consecutive months

Postponement of wealth tax exceeding NOK 30 000 on wealth in the form of ownership in a business suffering accounting deficit in 2020. This should also incentivate the relevant taxpayers to initiate a reduction to their advance tax.

Carryback of tax loss of up to MNOK 30 against taxable profits earned in 2019 and 2018. Hence, loss making companies having a recent history of taxable profit do not necessarily need to carry forward their loss.

Exemption from the air passenger tax for flights as of 1 January 2020 through 31 October 2020.

Exemption from all airport taxes through 1 June 2020.

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