Billions in Losses Trigger Danish Overhaul of Taxation Model

Denmark unveiled a thorough overhaul of its taxation model following a string of scandals that led to as much as 26.3 billion kroner ($4 billion) in losses in what the minister presenting the changes described as a decade of problems.

Tax Minister Karsten Lauritzen fired the department’s top director, Jesper Roennow Simonsen, and promised about 7 billion kroner in additional spending to improve Denmark’s revenue collection. The plan also entails hiring about 2,000 more employees.

Lauritzen spoke of an unwieldy organization that had grown too “big and complex” for its own good, at a press conference in Copenhagen on Friday. He implied that a lack of resources and inadequate use of digital technology were in part to blame for the losses.

The pledges to revamp revenue collection follow revelations that Denmark lost 12.3 billion kroner on tax dividend rebates to offshore recipients. The government is also missing about 14 billion kroner in taxes that Danes owe, but that the ministry has acknowledged may be too costly to try to reclaim, Lauritzen said.

The lost tax revenue puts pressure on a generous welfare system that successive Danish governments have warned is becoming harder to pay for.

For more on Denmark’s taxation scandals, click here

Clink here for a link to the Danish language statement.

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