Governments seeking to reduce their coronavirus bail-out exposure are excluding companies listed in alleged tax havens from bail-out cash.
In a tit-for-tat measure, governments in Europe argue that if a company chooses to locate somewhere to pay less tax, then they cannot qualify for financial rescue packages like companies that pay what they consider they should.
The first major nation to take the step is France.
Finance Minister Bruno Le Maire has announced that companies registered or controlling subsidiaries in tax havens cannot make a claim for a share of the country’s €110 billion coronavirus business rescue package.
The move follows similar decisions from governments in Poland and Denmark.
Governments get tough over tax
“It goes without saying that if a company has its tax headquarters or subsidiaries in a tax haven, I want to say with great force, it will not be able to benefit from state financial aid,” Le Maire said.
“There are rules that must be followed. If you have benefited from the state treasury, you cannot pay dividends and you cannot buy back shares.”
“And if your head office is located in a tax haven, it is obvious that you cannot benefit from public support.”
British Chancellor Rishi Sunak has not moved to exclude offshore companies from Britain’s coronavirus financial rescue measures.
But a Treasury spokesman confirmed they are looking at special measures for foreign companies.
In Poland, the government demands a company must pay domestic business tax before claiming state aid.
Call to end tax havens
“Let’s end tax havens, which are the bane of modern economies,” said Prime Minister Mateusz Morawieck
Denmark is spending nearly £60 billion to support businesses and jobs during the outbreak.
“Companies seeking compensation after the extension of the schemes must pay the tax to which they are liable under international agreements and national rules,” said a government spokesman.
“Companies based on tax havens in accordance with EU guidelines cannot receive compensation, insofar as it is possible to cut them off under EU law and any other international obligations.”
Places considered tax havens or ‘non-co-operative tax jurisdictions’ by the EU are:
- American Samoa
- Cayman Islands
- Trinidad and Tobago
- US Virgin Islands