Raymond Baker, president of Global Financial Integrity (GFI), applauded the move: “We whole-heartedly welcome the Danish government’s move to crack down on anonymous companies...Creating public registries of the true, human beneficial owner of each company – as the Danish intend to do – is a common-sense approach to curbing financial crime and the tremendous flow of illegal money.”
The UK, Ukraine and Russia have also made moves towards mandatory disclosure of beneficial owners of companies.
Following the OECD
According to the Ministry of Taxation, “The Danish government, has from the beginning, supported the efforts of the OECD to implement automatic exchange of information. The proposal to create registries of beneficial ownership information is independent of this effort, but does however serve the same purpose to increase transparency regarding taxation in order to prevent tax evasion.”
Although Denmark does seem to be moving in the same direction as the OECD, it appears a public registry for beneficial ownership has been on the cards for quite a while.
“They were planning to do it anyway. This is basically the result of a task force that the Danish government initiated back in 2013 based on some media attention regarding money transfer cases,” said Klaus Okholm of PwC.
Implications
At present, the reaction from taxpayers has been minimal but it is expected that the public registry will raise a number of concerns.
“Concerns have not yet been raised but I assume there will be issues about confidentiality...It’s the intention that a lot of information is not going to be made public but the memo clearly states that it should be accessible to tax authorities,” said Okholm.
The memorandum lacks detail and has left many questions unanswered.
How do taxpayers comply?
Does this apply to all companies big or small?
What does a company do if it does not have the information?
What are the ramifications if a company does not act?
Next steps
The legislation will be proposed in the second half of 2015. Implementation will depend on the outcome of negotiations on the Fourth EU Money Laundering Directive.
With pressure mounting on countries to improve tax transparency, it is expected that other nations will soon follow suit.
