April 20, 2020 / 1:47 PM / a month ago

Denmark blocks firms registered in tax-havens from state aid

COPENHAGEN (Reuters) - Denmark has become one of the first countries to ban companies that are registered in tax havens from accessing financial aid during the coronavirus pandemic.

The Nordic country, which has spent billions on aid for companies experiencing drastic drops in revenues due to a wide-ranging government lockdown, announced an extended aid package worth 100 billion Danish crowns ($14 billion) on Saturday.

But in an amendment to the aid measures, which now total close to 400 billion crowns, companies registered in tax haven countries will no longer be eligible for aid.

Additionally, firms applying for an extension of Danish state aid must now promise not to pay dividends or make share buy-backs in 2020 and 2021, it said.

The new restriction applies to firms registered in countries on the European Union’s list of “non-cooperative tax jurisdictions”, according to Rune Lund, tax spokesman for the leftist Red-Green Alliance.

“When we spend billions of taxpayers’ money on saving companies and jobs, they need to go to that purpose and not get sent to a tax haven on the other side of the world,” Lund told Reuters.

The list, which Lund said was not comprehensive enough, currently has 12 countries on it including Panama, the Seychelles and the Cayman Islands.

The government said companies would be allowed to pay dividends again if they pay back aid.

Poland, one of Europe’s most vocal opponents of tax havens, was the first to restrict large firms’ access to state aid based on whether they pay taxes in Poland earlier in April.

Estimates of tax evasion vary widely, but tax havens collectively could cost governments between $500 and $600 billion a year in lost revenue from corporates, according to some researchers.

Reporting by Nikolaj Skydsgaard; Editing by Toby Chopra and Giles Elgood

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