Overview of the audit process

An audit is an extended examination of specific areas of the company's reporting to the Tax Administration and underlying accounting and bookkeeping.

What happens during an audit

If we believe that your reporting does not provide a sufficient basis for assessing your transfer pricing practice, we may initiate a further examination. This also applies where the transfer pricing documentation does not provide a sufficient basis for assessing whether the conditions have been determined in accordance with the arm's length principle.

When we request your transfer pricing documentation, this means that we’ll examine the quality of the documentation more closely. This does not mean that we’re conducting a transfer pricing audit. In some cases, we’ll notify the company that an audit has been initiated at the same time as we ask for transfer pricing documentation.

A notification of audit gives you some rights and obligations under the Tax Administration Act. We’ll describe this in more detail in the audit notification. When we notify you of an audit, you do not have the opportunity to self-correct the relevant tax return.

In an audit notification, we’ll ask for more information and documentation from you. The information we request varies from case to case and depends on what we want to examine. This will typically be transfer pricing documentation, accounting data, meeting minutes, important agreements and other documents that may be relevant to the case.

Sufficient documentation and a quick response from you will help facilitate our assessment of the case. We can then decide more quickly whether there is a basis for further audit or whether we may close the case.

Meetings during an audit

It’s common that we have one or more meetings with the company during an audit. Meetings provide a useful arena for dialogue at different stages of the case.

We normally take the initiative for an opening meeting after we’ve assessed the documentation we’ve received. In the meeting, we can discuss how the case will proceed and clarify any questions we have for you. It’s common that the company presents the group and the most significant controlled transactions in the meeting.

We often hold meetings during the audit to clarify any issues or questions that arise.

In some cases, we also hold a final meeting where we go through the points that will provide the basis for a notification of change. It’s important to us that we agree on the circumstances of the case.

Written correspondence

Dere har ansvaret for å legge frem fullstendig dokumentasjon. Dere må legge dette frem så tidlig som mulig slik at saksbehandlingen blir effektiv. Dere må også dokumentere opplysninger dere har gitt i møte med oss.

You’re responsible for providing complete documentation. You must provide this documentation as early as possible to ensure efficient case processing. You must also provide documentation of information you have given us during a meeting.

Notification of change

If we believe that the basis for the assessment is incorrect, we’ll send you a notification of change. We’ll describe the basis for the case in the notification. The notification includes a description of the facts and the relevant legislation, as well as a preliminary conclusion about what we want to change.

Our assessments are often discretionary. When we base a decision on discretion, this means that we make our own assessments of the information in the case. We assess all the information and documentation in the case as a whole. In our assessments, we place emphasis on what we view as the most likely circumstances of the case. We place emphasis on whether an agreement corresponds to the actual circumstances, and whether this is supported by documentation. Documentation that was created at or very soon after the completion of the transaction (contemporaneous evidence) is given the greatest weight in our assessment. See more about this under the topic «Written agreements for controlled transactions».

Objections

You’ll have several opportunities to comment on the matter. We expect you to respond to the initial audit notification. You can request a draft of our decision, and you’ll have the opportunity to provide feedback on the draft.

Decision on change or case not proceeded with

Once we’ve considered all the information in the case and your comments and submissions, we can either dismiss the case or make a decision to change your tax assessment. In our decision, we’ll provide the grounds for the change. We’ll also inform you about your right to appeal our decision.

Rights in connection with the audit

We’ll make sure that you’ll have the opportunity to express your views on the case along the way. You have the right to have a representative assist or represent you during an audit.

You have the right to request access to the documents we use as the basis for our decision.

What can happen if you fail to co-operate during an audit?

You have a duty under the Tax Administration Act to co-operate during an audit. If you fail to co-operate, this may result in sanctions.

After an audit

In cases where we decide not to proceed with the audit, the audit will have no further consequences.

A dismissed audit is nevertheless a good opportunity for the company to review its transfer pricing practices. Improvements in how the company prices its transactions, creates documentation of transactions and reports on transfer pricing can help prevent subsequent audits.

If we make a decision to change the tax assessment that you disagree with, the process can take several directions.

Appeals and court proceedings

In our decision, you’ll find the grounds for the change. We’ll also provide information about your right to appeal. You have 6 weeks to appeal from the date you received our decision.

The appeal must be addressed to the tax office

• We may dismiss the appeal if it does not meet the requirements for an appeal.
• We may reverse our own decision, in whole or in part, after reviewing your appeal and supporting documentation.

If we do not find grounds to reverse our decision, we’ll send the appeal to the Tax Appeals Board. We’ll include a statement where we present our view on the case. The case is then prepared by the Secretariat of the Tax Appeals Board before it’s decided by the Board.

Content of the appeal

It’s important that you write specifically what you disagree with and why you disagree with the decision. It’s also important that you include all the information and supporting documents that can shed light on the case, so that we can make the most correct assessment of your appeal.

Decisions of the Tax Appeals Board

An appeal that has been sent to the Tax Appeals Board can be decided in several ways:

• The Appeals Board can dismiss the appeal even if this was not done by the tax office.
• The Appeals Board makes a decision to uphold the tax office's decision.
• The Appeals Board upholds the appeal, in whole or in part.
• The Appeals Board sends the case back to the tax office to review the case in full or in part.

Court proceedings

You can issue a summons to get the court to set aside the decision. The deadline to initiate legal proceedings is 6 months.

If you’re also in a MAP process, you can request a postponement of the court proceedings of 2 years. When this deadline has expired, you can request a final postponement of 2 more years.

Process to avoid double taxation – mutual agreement procedure (MAP)

When two companies in the same group are taxed on the same income in Norway and in another country, we call it double taxation. A mutual agreement procedure is an arrangement that follows from a tax treaty. Internationally, this is referred to as "Mutual Agreement Procedure" (MAP). This is a dispute resolution process that clarifies the division of taxation between two states.

More about MAP, the conditions for such agreements and the process (in Norwegian only).