Estimation of the Effective Tax Rates for Norwegian Companies
Estimation of the Effective Tax Rates for Norwegian Companies
To assess the attractiveness of a location with respect to the corporate tax system, especially the two measures of the effective marginal and the effective average tax burden are available. The effective marginal tax burden supplies information about the shift of the marginal investment due to taxation. It can be analysed whether an investment project has to earn a higher or lower rate of return due to taxation to be worthwhile undertaking. On the other hand, the effective average tax burden indicates the extent to which a given economic rent is reduced by taxation. According to the analysed economic situation, both measures can become relevant for investment and location decisions. This projects aimed at estimating the effective marginal and average tax burdens for Norwegian domestic investment. These were calculated for the corporate level as well as for the overall level, i.e. including taxation of the shareholders. The analysis was based on a model presented by Devereux and Griffith. Furthermore, the effective tax burdens for Norway were compared with those in the 15 EU countries. By doing this, the effective level of taxation could be ranked. Also, the most substantial differences in the structure of taxation could be highlighted. This served as a basis for conclusions about the attractiveness of Norway as a location for investment with respect to corporate taxation.