Well-known businessman criticizes special tax

- Why don't the politicians impose a tax or levy on the many Danish and foreign companies that work in Greenland for municipalities, the self-government and private individuals?

This question is raised by the well-known and successful businessman Martin Gjødvad in an interview in Sermitsiaq in connection with the debate on the Greenland Government's proposal for a special tax law, which the Greenland Parliament is currently considering.

Martin Gjødvad, who lives in Denmark, founded the IT company inu:it, which with 20 employees is Greenland's largest IT company measured by number of employees. Last year, inu:it had a turnover of 60 million kroner.

He also owns the company Inu:it Bolig, whose main activity is the rental of housing. The company also develops real estate projects that are primarily sold to private individuals.

- We deliver every tax krone we pay to the Greenland Tax Board, says Martin Gjødvad.

He now joins the chorus of critics who are extremely dissatisfied with the new bill, which has been called a punitive tax on Greenlandic companies.

Most recently, the owners of the electrical installation company Carl Lynge, Kitdlak Knudsen, and Auto-og Marine Service, Knud Laursen, have criticized the bill.

Critics of the proposal fear that the new special tax law will affect companies in connection with Danish and foreign investments, generational changes and directors' moves to Denmark.

Risking tax evasion

Inu:it's director has traveled to Denmark due to illness in the family.

- With this new legislation, it is very risky for him to travel back to Greenland. If the director has to travel back to Denmark, a special tax of 17 to 19 percent of the equity, which was just over 12 million kroner last year, will be due. This corresponds to a tax of up to 2.5 million kroner, Martin Gjødvad tells Sermitsiaq.

He points out that the company's assets are still in the company and are taxed in Greenland, even though inu:it's director has moved to Denmark.

- The director does not take anything out of the country. That would be theft, states Martin Gjødvad.

He points out that Inu:it employs and educates many people in Greenland.

Fertilizer: - Politicians should think carefully about

Martin Gjødvad thinks that politicians are focusing on something completely wrong with the bill on a special tax on Greenlandic companies.

- Greenland continues to allow Danish companies to flood into Greenland with their consultants and withdraw money from the country. Simply put.

- The members of Inatsisartut should think carefully before introducing the new tax law. Because the special tax gives foreign companies a competitive advantage over Greenlandic companies.

- With the new legislation, politicians are making it extremely difficult to run a Greenlandic business in Greenland.

- You are punishing Greenlandic companies and making it even more lucrative for companies from Denmark to come here and run with the money, he says.

Distortion of competition

Martin Gjødvad acknowledges that tax rules can be difficult to understand.

- But the new tax legislation makes it much more attractive to be a Danish company that has tasks in Greenland. In practice, Greenlandic companies risk a special tax, while Danish companies are tax-free in Greenland.

- Danish companies thus have a competitive advantage over Greenlandic companies. It is a distortion of competition, says Gjødvad.

Consultants from Danish or foreign companies, who have assignments in Greenland, leave no tax behind when they leave again. Neither corporate tax, dividend tax nor A-tax, he says.

Proposes tax on Danish companies

- They don't put any money into society, neither in the form of taxes nor other local support. I could just set up a company in Denmark, which would then get tasks in Greenland. It's easier and safer, and then I just pay some taxes in Denmark.

- But the politicians are blind to this. Why doesn't Inatsisartut introduce a tax or levy, for example 15 percent, for services that the many Danish and foreign companies operating in Greenland provide to municipalities, the self-government and private individuals. That would provide an incentive to establish themselves as a local company in Greenland, which does not have such a levy. That would be a simple solution, says Martin Gjødvad.

Has paid 100 million kroner in taxes

But with the new Inatsisartut legislation, he doesn't dare hire a new director in one of his two Greenlandic companies.

- What if the director has to move from Greenland for some reason, and I have to find a new director? Then the company risks getting a penalty tax of between 17 and 19 percent of the company's equity. That's crazy, says Martin Gjødvad.

His companies inu:it and Inu:it Bolig pay all taxes in Greenland and no taxes in Denmark or other countries.

Martin Gjødvad says that over the almost 30 years he has been running businesses in Greenland, he has paid over 100 million kroner in taxes in Greenland. This is in the form of corporate tax and dividend tax and A-tax.

- I am proud of that. I do everything I can to pay all my taxes in Greenland and pay almost no taxes in Denmark, even though I live in Denmark, he says.

Large residential construction to start soon

Martin Gjødvad reinvests all the money his two companies, inu:it and Inuit:it Bolig, earn in Greenland.

- I am about to build 72 homes on the old KNR site in Nuuk. Everything I work on takes place in Greenland. I just can't understand what the legislators, the politicians, want from me and my companies with the special tax they are about to introduce, asks Martin Gjødvad.

Inatsisartut's Finance and Taxation Committee will consider the proposal to amend the Income Tax Act on Thursday, December 18. Inatsisartut will have a second reading of the bill on February 2.

We have asked Naalakkersuisoq for Finance and Taxes for a comment on the article with Martin Gjødvad's criticism. But it has not been possible to get it.

- Naalakkersuisoq for Finance and Taxes, Múte Bourup Egede, has decided that a response will be published on Naalakkersuisoq's website at a later date.

The Ministry of Finance and Taxes wrote this in an email to Sermitsiaq on Monday, December 15, shortly after 5 p.m.