The Tax Ministry of Denmark has released new data and launched an investigation into the vast amounts of transactions Danish entities and tax havens. The investigation is part of the Ministry’s Project Money Transfer, which began with request to national banks to provide extensive information on customers’ money transfers to countries considered to be tax havens by the Tax Ministry. The requests were met with immediate opposition from banks, a move which raised public interest and built up awareness of a situation that could becomes the country’s biggest tax scandal ever. Initial investigations into the transfer data revealed evidence of at least 450 companies whose sole and purpose is to pipe capital from one jurisdiction into another, sometimes low tax, jurisdictions. Between the years 2007 and 2009, 85 of the 450 companies had recorded transactions exceeding DKK 100 million (approx. USD 18.2 million).
However, tax experts were quick to quell negative comments, saying that the figure could represent a large amount of legitimate business and legal tax planning. Jorgen Horiwitz, director of the Danish Bankers Association, pointed to the fact that UK is currently included in the list of countries considered to be tax havens by the Tax ministry of Denmark. As the UK is a primary export market for Denmark, a large part of the DKK 1 billion is explained by legitimate trade. Transactions with the UK account for more than half of the listed transfers. Likewise, Christen Amby, Danish tax expert, added that many of the transactions would have been completely genuine financial transactions, due to the inclusion of financial centers like the jurisdictions like Switzerland and Hong Kong.
However, other tax experts point to the likelihood of the money transfers involving companies, which are created with the sole purpose of piping capital from one jurisdiction to another, or transferring undeclared assets to low tax schemes and bypassing regular Danish tax regulations. Transactions involving the Bahamas, Cayman Islands, the British Virgin Islands and the Isle of Man are being investigated in particular to find evidence of such arrangements. Commenting on the possible use of suspicious company structures and dormant companies Preben Buchholtz Hansen, the head of the Tax Ministry’s economic crime division, said, “…we can see that there’s been deposits and withdrawals of more than one trillion kroner, and I’d be very surprised if it was all done by the book.”
Bent Greve, taxation expert at Roskilde University, estimates that up to DKK 15 billion (approx. USD 2.7 billion) of the total DKK1 billion is a direct result of explicit and purposeful intentional tax fraud. He believes that the outcome of Project Money Transfer and any subsequent prosecutions will aid Danish authorities in improving legislation surrounding the use of questionable tax methods by accountants, lawyers, banks, and other service providers in the financial industry, when dealing with potential tax havens and “grey” financial jurisdictions.
The Tax Ministry of Denmark considers the following jurisdictions to be tax havens (September, 2010):
- Austria
- Andorra
- Anguilla
- Antigua & Barbuda
- Aruba
- Bahamas
- Bahrain
- Barbados
- Belize
- Cayman Islands
- Cook Islands
- Cyprus
- The U.S. Virgin Islands
- British Virgin Islands
- United Arab Emirates
- Netherlands Antilles
- Dominican Republic
- UK
- Gibraltar
- Grenada
- Guatemala
- Guernsey
- Hong Kong
- Isle of Man
- Isle of Sark
- Jersey
- Latvia
- Liberia
- Liechtenstein
- Lithuania
- Luxembourg
- Macau
- Maldives
- Marshall Islands
- Monaco
- Montserrat
- Nauru
- Niue
- Panama
- Samoa
- San Marino
- Switzerland
- Seychelles
- Singapore
- St. Kitts and Nevis
- St. Lucia
- St. Vincent and the Grenadines
- Tonga
- Turks and Caicos Islands
- Vanuatu
source : Details on Denmark’s Largest Tax Scandal Emerging
