Obligation to keep accounts
Foreign enterprises that are engaged in or take part in activity in the Norwegian taxation area and that are liable to tax pursuant to domestic law are obliged to keep accounts pursuant to the Accounting Act section 1-2 first paragraph.
Among other things, this means that, pursuant to the Accounting Act section 3-1, enterprises must prepare annual accounts and annual reports. Pursuant to Regulations no 1062 of 7 September 2006 sections 10-1-1 and 10-1-2, chapters 3 to 7 of the Accounting Act do not apply to foreign enterprises with a turnover in Norway or on the Norwegian continental shelf of less than NOK 5 million, with the exception of enterprises that are engaged in petroleum extraction and pipeline transportation. The Central Office – Foreign Tax Affairs can also, in individual decisions, exempt enterprises with a turnover of more than NOK 5 million from the obligation to comply with the provisions of the Accounting Act chapters 3 to 7.
All transactions that are material to the assets, liabilities, income and expenses of the enterprise with an obligation to keep accounts must be registered in an accounting system. The registration shall include all information that is material to the preparation of the annual accounts and other financial reporting that follows from the law or regulations (statutory reporting). The accounting system must specify all the registered information on which the amounts in the statutory reporting are based. The accounting and accounting system must comply with the provisions of the Bookkeeping Act. Foreign enterprises are subject to specific requirements set out in section 8-8 of the Regulations of 1 December 2004 relating to bookkeeping.
For enterprises whose tax is assessed by the Central Office – Foreign Tax Affairs, statutory financial reporting includes the form ‘Extract of Accounts’ (RF 1045B). It is important that the accounting system is organised in a manner that enables this form to be filled in.
Auditing
Pursuant to the Act relating to auditing and auditors section 2-1, foreign enterprises have an auditing obligation from and including the year in which their operating revenues in Norway exceed NOK 5 million according to their annual accounts. A registered public accountant or state authorised public accountant must be used.
Control
The Tax Authorities are entitled at all times to demand access to the accounts of foreign enterprises that are engaged in activity in Norway or on the Norwegian continental shelf, cf. the Tax Assessment Act sections 4-10 and 6-15.
With respect to control of employees’ pay and the tax deducted, the Tax Collector – Foreign Tax Affairs is also entitled to examine and control the enterprises’ accounts pursuant to the Tax Payment Act section 5-13.
November 2009