Corporate tax cut to battle equity funds

After ruffling the feathers of political allies and the business community with a plan to battle private equity funds, the tax minister's has unveiled a revised strategy

Top members of the Liberal-Conservative government have reached an agreement on a revised tax proposal that will lower the corporate tax rate from 28 percent to 24 percent in an attempt to keep capital investments inland, reported Politiken newspaper Thursday.

The tax minister, Kristian Jensen, presented the proposal to parliament Wednesday evening after months of ironing out sticking points between the two parties and rectifying details that had miffed influential business moguls.

The proposal's aim is to help smaller businesses increase their potential earnings while hoping to confront the issue of excessive interest deductions by equity capital funds. The new plan also addresses the principle of 'thin capitalisation', putting a limit on how much debt a company can operate on and still be eligible for tax deductions.

In January the government had proposed to cut corporate taxes to 22 percent to battle the increasing number of foreign private equity funds, but the proposal backfired when many of the country's largest companies, including shipping and oil giant A.P. Moller-Maersk, threatened to move their headquarters abroad because provisions of the proposal adversely affected their own business activities.

The new proposal has already been turned down by the opposition's Social Liberals on the grounds that the money saved from the plan will not be used toward lowering personal income taxes.

Another opposition voice, John Dyrby, the Social Democratic taxation spokesperson, said his party was unlikely to support the proposal either.

'It's reasonable enough to take up the issue of thin capitalisation, but it's completely unnecessary to lower corporate taxes. Then it's no longer about taking action against equity capital funds but about the government saving face.'

Andre læser

Mest læste

Del artiklen