During the summer the Danish government has published a new action plan on regulation of multinational companies based in Denmark and in foreign countries. The government has concentrated the efforts on loss-making companies and companies with transactions in tax havens.
An analysis behind the action plan shows that 30 % of all foreign and 28 % of all Danish multinational companies have paid no company tax in Denmark in the period 2006-2008. There may be various reasons for this. The government points out that the lack of tax payments might be a consequence of the fact that the companies' transfer prices having been fixed to make sure that the company has no corporate profit in Denmark.
According to the action plan the government considers the following:
- openness about multinational companies' tax conditions,
- introduction of a special auditor's certificate for loss-making companies and companies having transactions with tax havens,
- a tightening of the regulations regarding carry-forward of losses, depreciations, tax deductions of financing expenses and other special rules concerning multinational companies.
In general, the government wants to test the scope of the existing special rules concerning multinational companies. It is likely that the tax authorities will to a greater extent test the scope of the rules before the Danish tax tribunal and before the courts.
The government will during the autumn invite to political negotiations regarding a tightening of the regulations on taxation of multinational companies. Until then, it is uncertain which rules will be tightened or amended. However, the action plan indicates a tightening of the transfer pricing rules.
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