After years of scandals, here’s how Denmark’s reformed tax authority will look
Denmark’s crisis-torn tax authority Skat will be dismantled and restructured as seven new agencies, the government announced Tuesday, after a series of scandals in recent times.
The government says that more staff and offices across the country will save the country’s dysfunctional tax administration.
Prime Minister Lars Løkke Rasmussen and Minister for Tax Karsten Lauritzen presented the government’s reform plans for the Skat tax agency Tuesday, reports Politiken.
The plan is entitled “From One to Seven Tax Authorities,” and will be implemented by 2021, says the report.
By July 1st 2018, Skat will be replaced by a debt agency (Gældsstyrelsen), valuation agency (Vurderingsstyrelse), tax agency (Skattestyrelsen), customs agency (Toldstyrelsen), vehicle agency (Motorstyrelsen), development and simplification agency (Udviklings- og Forenklingsstyrelsen) and administration and service agency (Administrations- og Servicestyrelsen).
Existing Ministry of Tax agencies for appeals and gambling will be retained, leaving nine separate agencies in total.
By 2019, Danes will receive their annual tax statements from the new tax agency, while home owners will receive valuations from the valuation agency.
Five of the new agencies will also be given head offices outside of Copenhagen, in a move that will bring 1,500 jobs to provincial regions, either by creating positions or moving them from the capital. Around 1,000 new jobs will be created, writes Politiken, with the government estimating a total of 3,300 new hires by 2021 after retirements and other positions being vacated are taken into account.
A seven billion kroner ($1.1 billion) fund, which was announced as a reform budget for Skat reforms in 2016, will finance the new plan.
Skat has been plagued by various scandals in recent years, including a failed IT administration system, uncollected debts, fraud and incorrect real estate valuation. File photo: Erik Refner/Scanpix
The existing tax authority, which was established in 2005, has been plagued by scandals in recent years, with controversies piling up in the months leading up to Tuesday’s announcement by the government.
READ ALSO: Denmark pays for Panama Papers data on own citizens
In 2015, Skat was forced to scrap tax collection via its electronic EFI system, after errors with the programme failed to collect owed money while also requesting expired debt.
The collapse of EFI and subsequent switch to manual administration led to the Danish state being owed 92 billion kroner ($14 billion) in unpaid taxes. In April this year, the Politiken newspaper reported that the state would likely have to write down much of the unpaid debt owed to it by citizens and businesses.
The chaos within the authority has also left statistics on citizens' debts impossible to obtain, the Berlingske newspaper reported in 2016.
In August 2015, Skat reported tax fraud to the tune of 6.2 billion kroner ($940 million) – later revised upward to 12.3 billion kroner ($1.9 billion) – to Denmark’s State Prosecutor for Economic Crime (Statsadvokaten for Særlig Økonomisk Kriminalitet). The frauds were related to returns on stock, including dividends, in Danish companies paid to foreign companies.
READ ALSO: Top Danish tax official fired after scandals cost billions
Denmark’s National Audit Office has also estimated that three out of four valuations of detached houses carried out by Skat in 2011 were incorrect.
According to the office, the tax ministry failed to intervene despite having been aware of the incorrect valuations.
Home owners are estimated to be owed a total of ten billion kroner ($1.5 billion) by Skat as a result of incorrect valuations, according to Politiken.
The National Audit Office strongly criticised Skat in a September 2016 report, calling its management of accounts “weak and insufficient” to such a degree that the state risked losing money. Collection of tax money from citizens and companies alike may also have been done on incorrect bases, wrote the audit office.
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The government says that more staff and offices across the country will save the country’s dysfunctional tax administration.
Prime Minister Lars Løkke Rasmussen and Minister for Tax Karsten Lauritzen presented the government’s reform plans for the Skat tax agency Tuesday, reports Politiken.
The plan is entitled “From One to Seven Tax Authorities,” and will be implemented by 2021, says the report.
By July 1st 2018, Skat will be replaced by a debt agency (Gældsstyrelsen), valuation agency (Vurderingsstyrelse), tax agency (Skattestyrelsen), customs agency (Toldstyrelsen), vehicle agency (Motorstyrelsen), development and simplification agency (Udviklings- og Forenklingsstyrelsen) and administration and service agency (Administrations- og Servicestyrelsen).
Existing Ministry of Tax agencies for appeals and gambling will be retained, leaving nine separate agencies in total.
By 2019, Danes will receive their annual tax statements from the new tax agency, while home owners will receive valuations from the valuation agency.
Five of the new agencies will also be given head offices outside of Copenhagen, in a move that will bring 1,500 jobs to provincial regions, either by creating positions or moving them from the capital. Around 1,000 new jobs will be created, writes Politiken, with the government estimating a total of 3,300 new hires by 2021 after retirements and other positions being vacated are taken into account.
A seven billion kroner ($1.1 billion) fund, which was announced as a reform budget for Skat reforms in 2016, will finance the new plan.
Skat has been plagued by various scandals in recent years, including a failed IT administration system, uncollected debts, fraud and incorrect real estate valuation. File photo: Erik Refner/Scanpix
The existing tax authority, which was established in 2005, has been plagued by scandals in recent years, with controversies piling up in the months leading up to Tuesday’s announcement by the government.
READ ALSO: Denmark pays for Panama Papers data on own citizens
In 2015, Skat was forced to scrap tax collection via its electronic EFI system, after errors with the programme failed to collect owed money while also requesting expired debt.
The collapse of EFI and subsequent switch to manual administration led to the Danish state being owed 92 billion kroner ($14 billion) in unpaid taxes. In April this year, the Politiken newspaper reported that the state would likely have to write down much of the unpaid debt owed to it by citizens and businesses.
The chaos within the authority has also left statistics on citizens' debts impossible to obtain, the Berlingske newspaper reported in 2016.
In August 2015, Skat reported tax fraud to the tune of 6.2 billion kroner ($940 million) – later revised upward to 12.3 billion kroner ($1.9 billion) – to Denmark’s State Prosecutor for Economic Crime (Statsadvokaten for Særlig Økonomisk Kriminalitet). The frauds were related to returns on stock, including dividends, in Danish companies paid to foreign companies.
READ ALSO: Top Danish tax official fired after scandals cost billions
Denmark’s National Audit Office has also estimated that three out of four valuations of detached houses carried out by Skat in 2011 were incorrect.
According to the office, the tax ministry failed to intervene despite having been aware of the incorrect valuations.
Home owners are estimated to be owed a total of ten billion kroner ($1.5 billion) by Skat as a result of incorrect valuations, according to Politiken.
The National Audit Office strongly criticised Skat in a September 2016 report, calling its management of accounts “weak and insufficient” to such a degree that the state risked losing money. Collection of tax money from citizens and companies alike may also have been done on incorrect bases, wrote the audit office.
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