France has become the last country to ban companies registered in offshore tax havens from bailouts of coronaviruses, after Denmark and Poland.
French Finance Minister Bruno Le Maire announced today that companies registered or controlling subsidiaries in tax havens are not eligible for the € 110 billion bailout.
“It goes without saying that if a company has its tax headquarters or its subsidiaries in a tax haven, I would like to say with great force that it will not be able to benefit from financial aid from the State,” said Le Maire at France Info radio.
The United Kingdom has not yet taken the step, although experts say the authorities are unlikely to do so.
Finance Minister Bruno Le Maire (photo) announced today that companies registered or controlling subsidiaries in tax havens are not eligible for the € 110 billion bailout package.
The Mayor added: “There are rules to follow. If you have benefited from the public treasury, you cannot pay dividends and you cannot redeem shares. “
“And if your head office is located in a tax haven, it is obvious that you cannot receive public support. “
Of France’s 110 billion euro package, four billion has been earmarked for struggling startups, while 20 billion euros has been earmarked for larger companies, such as Air France.
The United Kingdom, the Netherlands, Switzerland and Luxembourg all have provisions which make them attractive to companies which also allow them to be registered abroad.
A spokeswoman for Her Majesty’s Treasury told Business Insider that she was looking into the specific point on tax havens.
One expert said the UK should consider copying Denmark’s approach, as bailouts must be accompanied by conditions that guarantee “good trading behavior”.
Poland and Denmark also prohibit companies registered in tax havens from accessing financial assistance during the coronavirus pandemic, making France the third country to take the plunge.
Denmark, which has spent billions of dollars in aid to companies experiencing a drastic drop in income due to a massive government blockage, announced on Saturday an extensive aid program worth 100 billion Danish kroner (11 billion pounds).
But in an amendment to the aid measures, which today total almost 400 billion crowns, companies registered in paradise countries will no longer be eligible for aid.
Danish Prime Minister Mette Frederiksen (photo) banned tax haven businesses from accessing financial aid during the coronavirus pandemic
The Danish Ministry of Finance said in a statement: “Companies claiming compensation after the extension of the schemes must pay the tax they are liable under international agreements and national rules”.
“Businesses based on tax havens according to the EU guidelines cannot receive compensation, as long as they can be removed under EU law and any other international obligation. “
In addition, companies requesting an extension of Danish state aid must now promise not to pay dividends or buy back shares in 2020 and 2021, he said.
The new restriction applies to companies registered in countries on the European Union’s list of “non-cooperative tax jurisdictions”, according to Rune Lund, tax spokesman for the Left Green Red Alliance.
“When we spend billions of taxpayer dollars to save businesses and jobs, they have to go that way and not be 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 includes 12 countries, including Panama, Seychelles and the Cayman Islands.
Polish Prime Minister Mateusz Morawieck (pictured in a parliamentary debate on April 16) said companies must pay national business taxes before they can claim one of the country’s £ 5 billion bailout package.
The government has said companies will be allowed to pay dividends again if they repay the aid.
Poland, one of the most vocal opponents of tax havens in Europe, was the first to restrict corporate access to state aid based on the fact that it pays taxes in Poland on April 8.
Prime Minister Mateusz Morawieck said companies must pay national business taxes before they can claim one of the country’s £ 5 billion bailout package.
“Let’s end tax havens, which are the bane of modern economies,” he said.
Estimates of tax evasion vary widely, but collectively, tax havens could cost governments between $ 500 billion and $ 600 billion a year in lost business revenue, according to some researchers.