news’s dramatic reports about the tax rates of the companies of property investor Ivar Tollefsen are based on several serious professional errors. It is not about the usual disagreement about tax levels, but misleading facts. A company has several accounts. One is the financial accounts (of which there are again several variants), another is the tax accounts. There can be big differences between these. news’s reports mix these two, but are so unclear that viewers and readers do not know when they are talking about what. The main point about a low tax rate far below the formal corporate tax rate of 22 per cent has sparked a lot of indignation. But the presentation is wrong and is apparently due to having seen the tax cost in relation to the result in the financial statements. You get a number somewhere (women with prostate cancer) and compare it to something else (men with prostate cancer), but use the same term “persons” for both groups so that the reader does not see that you are talking about two different things. Skewed in, skewed out. The following example closer to tax rates can illustrate why news’s notices are completely misleading. For financial accounts drawn up in accordance with international accounting standards, income must sometimes be recognized for an increase in the value of immovable property that has not been sold. In Oslo, there could be a 10 per cent increase in the value of housing in 2024. A person with a 100 m² apartment worth NOK 10 million at the start of the year can get a value increase of NOK 1 million. Everyone agrees that it neither can nor should lead to a corresponding increase in taxable income. The tax rate would be rather low if the person’s tax (on salary and pension, e.g. NOK 700,000) were to be seen in relation to a fictitious income of NOK 1,700,000 (the salary plus the increase in value of the home: NOK 700,000 + NOK 1,000,000). Another difference between financial accounting and tax accounting concerns the carrying forward of losses. In the tax accounts, losses from previous years are deducted. We cannot tax the trader’s profit and disregard losses. If carry-forwards to later years were not allowed, a cash subsidy would have to be given in the year with a loss. That news’s reports support indignation against such a self-evident rule is very unfortunate. Furthermore, dividends can be recognized as income in a company account, while they must be disregarded in a tax account. Again, different considerations mean that the two accounts end up with different bottom lines. The vast majority will understand that Norway, like other countries, does not tax dividends again and again when it goes from e.g. subsidiary subsidiary of subsidiary of parent company. As associate professor Finn Kinserdal writes in Dagens Næringsliv on 10 June, the matter gets even worse when subject editor Marius Tetlie defends news’s professional blunders by saying the reports show that the companies pay less tax than the figures from the tax authority show. One does not think it can be true that the journalists have obtained figures from group accounts about what the group pays in total tax in all countries and then say that this is not what the tax authority’s figures show. Yes, of course, one is tax to Norway (Norwegian tax authority), another is tax to all countries. The differences are so great (NOK 215 million in the group net income compared to NOK 0.6 million in the tax authority’s figures) that one wonders why the journalists’ alarm bells have not rung. Journalists and a state public broadcaster with tax revenues in the billions cannot excuse themselves that tax law is so infinitely difficult. That the tax accounts and the financial accounts are different is a fundamental lesson. The fact that “the lady in the street” may not know that does not exempt an editorial staff with reports almost of war types from familiarizing themselves with such basic facts. If you think it’s okay, a public broadcaster’s social responsibility and thus the right to such broad funding erodes. The advertisements are used to claim that Norwegian companies actually pay little tax. These claims are very easy to verify. Every year, the Ministry of Finance publishes tax rates in Norway in relation to other countries in the state budget. The latest available effective tax rates are for 2021 and were for Norway 20.8 per cent (slightly lower than the formal rate of 22 per cent). Norwegian companies are taxed more heavily than in Finland, Sweden and Denmark with 19.6 per cent, 18 per cent and 19.8 per cent respectively (St prp LS no. 1 2023–2024 p. 53). The figures for Norway are actually much worse for Norwegian-owned companies, since Norway has a peculiar Norwegian ownership taxation in the form of wealth tax and the associated dividend tax, which is triggered when the Norwegian shareholders have to raise funds to pay the wealth tax. It gets wrong when news’s announcements have as their message that Norwegian companies are taxed far too low. Norwegian taxation is too harsh, not least through wealth tax and dividend tax. We should not make matters worse for future Norwegian value creation by allowing grossly misleading tax notices to lead to even worse framework conditions for the country’s business activities. news’s weak professional level in this matter is emphasized by the fact that the subject editor Marius Tetlie messes it up even more with his answers, and apparently without even seeing it. He also tries to excuse himself by saying that news has been in contact with “a number of professionals and experts in tax”. Sometimes you get the answers you ask for, and journalists can shy away from sources they suspect may represent a corrective and “destroy” sensational reports. One must beware of ascribing particular importance to oneself, but for the sake of completeness it is nevertheless mentioned that the undersigned and other professionals I find difficult to understand would fail to see some of the weaknesses, are not among the allegedly large number of experts news has contacted. With the spread of fake news and “artificial” news in the form of AI, news’s societal mission has been reinforced in terms of reprehensibility. When billions are given to news every year, one of the things you pay for is reliability. It must be assumed that the algorithms AI uses to “learn” from open sources on the web place extra emphasis on sources like news which are expected to be highly truthful. It is disturbing that news’s subject editor does not see the serious trust and legitimation problem the institution has become entangled in with these reports. Published 11.06.2024, at 17.15
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Gross professional mistakes about tax – Statement
