Recently in International affairs Category

It's been a long time since this blog featured stories of companies threatening to emigrate (see, for example here and here) due to the UK tax and regulatory burden. This time, however, the news is of traffic in the opposite direction, in this case, from Norway to the UK.

Some big shipping companies in Norway, in protest at proposed changes to the tonnage tax system in that country, are threatening to re-domicile to the UK. It is estimated that the proposed tax rules will have the effect of landing the Norwegian shipping industry with a tax bill of just over $2bn. This is because, under the old rules, payment of tax could be deferred so long as certain conditions were met. This rule has been in place since 1996, with Norwegian companies taking full advantage of it. Now, it is proposed that two-thirds of the tax deferred over the past ten years be paid by the shipping companies concerned.

Outrageous, and it is easy to see why the shipping companies are threatening to leave. Never mind that the companies are to be given ten years in which to pay over the deferred tax, whatever happened to certainty in the law? The shipping companies, on meeting the conditions imposed by Norwegian tax law, were quite entitled to retain the tax credits. To then be told that the Government had changed its mind, and wanted the money after all, one can see how that would rankle.

I am interested to see if Norway gets away with imposing this retrospective tax. Maybe the threat of a mass exodus of shipping companies would force them to think twice. Closer to home, though, I wonder whether the British Government is watching all this, and wondering what, if any, lessons it can learn from Norway's brazen behaviour. The prospect of levying a blatantly retrospective tax would be too tempting an opportunity to pass up. Heaven knows there are so many areas in the UK tax system that could be vulnerable to such an attack.