NOTE 4
INCOME TAXES

The tax charge is calculated on the basis of the accounting result and is divided between taxes payable and deferred taxes. Deferred taxes arise from timing differences between accounting and taxation balance sheet values.

Tax charges are divided between tax charges arising from Norwegian operations and foreign operations:



RECOGNIZED DEFERRED TAX ASSETS AND LIABILITIES

Permanent differences for the group relate mainly to tax deductions for exercised share options for employees in TANDBERG Inc, and non-taxable costs related to IFRS.

The Group’s estimated tax rate for 2005 was reduced from 30% to 28% based on new estimates for the long-term effective tax rate for the Group.

Due to a higher probability of utilization of tax losses carried forward, MUSD 4.8 has been capitalized as deferred tax assets related to tax losses carried accumulated in TANDBERG Telecom UK Ltd (formerly Ridgeway Software and Technology Ltd.). The tax losses can be carried forward indefinably.

In 2004, the tax authorities gave notice that they will review TANDBERG asa’s intragroup purchase of BTVI/Canvas (now a part of TANDBERG Inc.). The tax authorities have indicated a possible increase in taxable income for TANDBERG asa of between USDm 9.2 - 10.8 for the tax year 2000. The issue has not been resolved by the tax authorities as of 31 December 2005. As of 31 December 2005 no provision for the potential tax adjustment has been made.