Danish companies pay relatively little in corporate tax compared to a large number of OECD countries. The Danish corporate tax is on par with the other Nordic countries, while Denmark has the third-best competitiveness in the world. This is stated in a press release by the Danish Labour Movement's Business Council.
21 OECD countries have a higher corporate tax rate than Denmark, where the rate is 22 percent. This level corresponds to Norway and is close to the other Nordic countries. Also measured in terms of effective tax rates, Denmark is among the lowest in the OECD. The effective average corporate tax rate is 20.4 percent, which places Denmark 24th out of 38 OECD countries.
- Denmark's corporate tax is at the low end of the OECD and is on par with the other Nordic countries, which are also small, open economies, says Frederik Olsen, an analyst at the Danish Labour Movement's Business Council, based on an analysis from the organization.
Both Foreign Minister Lars Løkke Rasmussen (M), the Confederation of Danish Industry and the Confederation of Danish Industry have recently proposed lowering corporate tax.
- Several actors want to lower Danish corporate tax. The argument is often that there is a need to improve competitiveness. But Danish competitiveness is among the highest in the world. At the same time, the surplus on the balance of payments is historically large, and the Danish level of prosperity is sky-high, says Frederik Olsen.
According to the latest report from the IMD World Competitiveness Center, Denmark has the best competitiveness in the EU and the third best among 67 countries surveyed globally.
- It is difficult to see that competitiveness should be a good argument for lowering corporate tax, says Frederik Olsen.
- When Denmark is one of the most competitive countries in the world, it is not due to the tax system, but to our healthy and flexible labor market with competent employees and entrepreneurs. It is more obvious to point to our well-educated workforce as a catalyst for competitiveness, says Frederik Olsen.
According to standard accounting principles, corporate tax breaks cost the state money. They must therefore be financed through debt, other tax revenues, savings or reforms to compensate for the lost revenue.
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