Offshore companies will not receive assistance
European countries refuse to provide access to financial aid to companies registered in offshore tax havens.
Denmark’s finance ministry said the government has extended its bailout program until July, but stressed that firms based in tax havens will no longer receive aid..
«Companies applying for compensation after the extension of the relevant programs must pay taxes in accordance with international agreements and national regulations, the statement said. – Companies registered with tax havens in accordance with EU guidelines cannot receive compensation».
Poland took similar measures on April 8.
Prime Minister Mateusz Morawiecki said large companies wishing to receive part of the 25 billion zlotys ($ 6 billion) bailout fund must pay business taxes domestically.
«Let’s end the tax havens that are the bane of the modern economy», – he added.
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Tax havens are countries with low or no business taxes.
Companies are officially registered with addresses in these countries, which means that they often do not pay taxes in the countries in which they actually operate.
Some of the most famous havens include Gibraltar, Bahamas, Andorra, Bermuda, British Virgin Islands, Cayman Islands and Panama..
It is unclear if other European countries will follow the example of Denmark and Poland, but it is unlikely that the authorities of the UK, the Netherlands, Switzerland and Luxembourg will do so..
«Together [they] make up half of the world’s tax evasion», – reported by The Tax Justice Network.
All four countries have legal provisions that make them attractive to businesses, which also allow them to be registered abroad..
«Companies looking to dodge their social obligations by cutting their tax spending shouldn’t expect to be bailed out when things go wrong, Business Insider told Business Insider. Robert Palmer, Executive Director of UK Tax Justice. – The UK government should seriously consider copying Denmark’s approach. Any assistance must be accompanied by conditions that ensure good business behavior».
Business Insider contacted the UK Treasury to see if the UK would consider imitating Denmark and Poland, but has yet to receive a response..
Several industries are known for making the most of offshore tax breaks – especially the cruise industry, which most severely affected by the coronavirus.
Carnival, Royal Caribbean and Norwegian Cruise Line corporations account for more than two-thirds of the entire industry, but they are officially registered as companies in Panama, Bermuda and Liberia, respectively..
A number of cruise ships have experienced major coronavirus outbreaks while at sea, drawing international media attention.
Cruise operators initially petitioned the U.S. government for bailout and hoped the $ 2 trillion Senate bailout bill would be their lifeline..
However, the bill stipulates that companies must be «created or organized» in USA. The International Cruise Lines Association told the Washington Post on March 26 that they were unable to get help..
Market participants in several countries are urging governments to go to war with offshore funds. They say reallocating these taxes is vital to deal with the fallout from the coming financial crisis caused by the coronavirus..
«Sustainable and reliable public response to shocks requires administrative capacity and tax resources, believes Rasmus Corlin Christensen from the International Center for Taxes and Development. – Tax evasion and global tax competition, more broadly, limit countries’ ability to attract these resources».
Fabio Fazio, famous Italian TV presenter, said tax evaders were complicit in death from the virus.
«It became clear that those who do not pay taxes are guilty not only of crime, but also of murder: if there are no beds and respirators, they are partially to blame.», – he wrote in an article for La Repubblica.
Alan Rusbridger, a former editor of the Guardian newspaper, said the UK government should force companies with offshore tax breaks to give them up in exchange for government aid.
«We are acutely aware that our government services are significantly underfunded. So here’s a suggestion: Before any company gets government support, it must first promise to abandon any artificial tax evasion mechanisms in the future, he tweeted on March 22. – A huge number of corporations are developing ways to avoid imposing any taxes on the maintenance of our hospitals and other basic services».
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