Denmark and Poland refusing to bail out companies registered in tax havens

Denmark and Poland are refusing to let companies registered in offshore tax havens seek financial aid from their coronavirus bailout packages.

Faye BrownTuesday 21 Apr 2020 metro.co.uk 

Denmark and Poland are refusing to let companies registered in offshore tax havens seek financial aid from their coronavirus bailout packages.

The Danish finance ministry extended its support scheme until July, but warned firms that have not paid domestic taxes would not be eligible for state aid.

‘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 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.’

Poland has attached similar conditions to its own bailout scheme. Prime Minister Mateusz Morawiecki said large companies wanting a chunk of a roughly £5 billion bailout fund must pay domestic business taxes.

‘Let’s end tax havens, which are the bane of modern economies’ he said.

Following the news of Denmark and Poland, there were calls for other countries, including the UK to follow suit.

Tax heavens are countries which have low or no business rates. Companies can register themselves at an address at these places while avoiding paying taxes in the countries they operate.

Last year, an investigation found the UK was the ‘biggest enabler of global corporate tax dodging’. An index published by the Tax Justice Network found that the UK has ‘single-handedly’ done the most to break down the global corporate tax system which loses an estimated $500bn (£395bn) to avoidance.

Famous heavens include Gibraltar, the Cayman Islands and the British Virgin Islands – where Sir Richard Branson lives.

The billionaire has faced criticism this week for appealing for taxpayer aid to save his airline Virgin Atlantic, rather than drawing on his huge wealth. Many pointed out that the entrepreneur has paid the exchequer no personal income tax since moving to the tax- free Necker Island 14 years ago.

Branson said he was asking for a taxpayer loan, not a handout. He has pledged his luxury island resort as collateral to help him secure the bailout, believed to be £500m.

And he hit back at criticism that he was a tax exile who did not deserve help, saying he and his wife ‘did not leave Britain for tax reasons but for our love of the beautiful British Virgin Islands and in particular Necker Island’.

But head of Tax Justice UK Robert Palmer, has urged the government not to cave into his request.

‘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’ he told Business Insider.

‘The UK government should seriously look at copying Denmark’s approach. Any bailout needs to come with conditions to ensure good business behaviour.’

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