Secretive shipping and oil conglomerate AP Moller-Maersk has gone on the counter-offensive after the Liberal tax minister, Kristian Jensen, accused it of paying too little in corporate tax. Maersk chose to take the extraordinary step of publicly stating that it paid DKK 9.1 billion in taxes in 2005, including DKK 3.6 billion in corporate tax.

Jensen had stated on the floor of parliament that nine out of the country’s 20 largest companies, including Maersk, Carlsberg and Danisco, paid a total of DKK 300 million in corporate taxes in 2005. The government’s tax figures did not include tax paid by Maersk on its North Sea oil extraction. According to the company 94 percent of its taxes - DKK 8.6 billion - were paid by its subsidiary, Maersk Oil and Gas on the activities.

Jensen declined to comment about the disagreement between Maersk and his ministry but said of the discrepancy: ‘It’s a question of definitions. There is a difference between how corporate tax is calculated. … It’s a matter of wording when AP Moller-Maersk says it pays DKK 3.5 billion [sic], while the Tax Ministry has calculated that five companies [sic] combined only paid DKK 300 million in taxes.’

The tax minister’s singling out of a group of companies in parliament raised eyebrows, given that many of them were the same as those criticising the government’s plan to restructure corporate tax regulations. The new regulations would reduce the corporate tax rate to 22 percent from 28 percent. But they would also serve as a defence against private equity funds by tightening regulations that allow companies to deduct debt from their taxes.

Maersk and other large Danish companies have been accused of using the same loopholes as private equity funds to avoid paying taxes. ‘They borrow money and then deduct the interest to avoid paying taxes, which is pretty much the same thing capital funds do,’ Peter Christensen, Liberal finance spokesperson, told Berlingske Tidende newspaper.

The government has taken the complaints by Maersk and other large companies into consideration, announcing earlier this week that it would recast the proposal. Jensen said that in the new proposal there would be greater leeway to deduct debt. But he also warned that the tax cut would also be smaller as a result - something he considered unfortunate. ‘We still firmly believe that a low corporate tax rate is the best defence against asset stripping.’

Source: The Copenhagen Post

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