Both Poland and Denmark are refusing to bail out companies that despite working in their countries, are registered elsewhere in order to avoid paying tax
Poland and Denmark are denying companies that are registered in offshore tax havens access to financial aid from the coronavirus bailout packages available to businesses in the countries
On Saturday, the Danish finance ministry extended its bailout program through to July, but made sure to state that firms based in tax havens would no longer be covered within the program.
“Companies seeking compensation after the extension of the schemes must pay the tax to which they are liable under international agreements and national rules,” a translation of the statement from the ministry said.
“Companies based on tax havens in accordance with EU guidelines cannot receive compensation, insofar as it is possible to cut them off under EU law and any other international obligations.”
This news comes as Denmark has been recovering from the COVID-19 pandemic, and has become on of the first countries to re-open its schools following lockdown measures.
Poland issued similar measures on the 8th of April. The country’s Prime Minister, Mateusz Morawiecki, said that large companies wanting access to the roughly $6 billion bailout fund, must pay domestic business taxes.
The Prime Minister went on to say:
“Let’s end tax havens, which are the bane of modern economies,”
Offshore Tax havens refers to countries that have low or no business taxes, meaning that companies that register themselves at addresses within these countries often benefit by avoiding paying business taxes to the countries in which they operate.
The most notorious offshore tax havens include: Gibraltar, the Bahamas, Andorra, Bermuda, the British Virgin Islands, the Cayman Islands, and Panama.
It is unclear whether or not other countries within Europe will follow the example of Denmark and Poland, but it is unlikely that governments in the UK, the Netherlands, Switzerland, and Luxembourg will do, seeing as all four of those nations have provisions set in place that enable businesses to be registered offshore.
“Together, they are responsible for half of the world’s corporate tax avoidance risks,” the Tax Justice Network said last year.
“Companies that seek to dodge their obligations to broader society by cutting their tax bills shouldn’t expect to get bailed out when things go wrong,” Robert Palmer, the executive director at Tax Justice UK said.
“The UK government should seriously look at copying Denmark’s approach. Any bailout needs to come with conditions to ensure good business behaviour.”
A spokeswoman for Her Majesty’s Treasury has said:
“Obviously we’ve set up schemes at pace, and they are designed to support jobs in Britain.”
“Sometimes that will involve foreign companies who employ people in the UK for example. But we are looking into the specific point on tax havens where as you know we have already taken considerable action.”
Some industries are notorious for taking advantage of offshore tax breaks, the cruise industry is one such business and has been surverely disrupted by the COVID-19 pandemic, with many cruise-ships having major coronavirus outbreaks while at sea.
Carnival Corporation, Royal Caribbean, and Norwegian Cruise Line, make up over 66% of the cruise industry, and are formally registered in Panama, Liberia, and Bermuda respectively.