A Call for Fair Taxation in Greenland’s Business Landscape
In a recent interview with Sermitsiaq, prominent businessman Martin Gjødvad posed a challenging question: why are Danish and foreign companies operating in Greenland not subjected to a tax or levy? This inquiry emerges amid ongoing discussions surrounding the Naalakkersuisut’s controversial special tax law, currently under review by the Inatsisartut.
Gjødvad, who resides in Denmark and founded the IT firm inu:it — the largest of its kind in Greenland with 20 employees and a turnover of DKK 60 million last year — is no stranger to the complexities of the local business environment. He also runs Inu:it Bolig, a company focused on real estate development and property rentals.
“We hand over every tax krone we pay to the Greenland Tax Agency,” Gjødvad remarks, as he joins a chorus of critics voicing concerns over the proposed legislation, which many believe penalizes Greenlandic companies.
Notably, business owners such as Kitdlak Knudsen of Carl Lynge Electrical Installations and Knud Laursen of Auto-og Marine Service have also voiced their objections, apprehensive that this new tax law could deter both domestic businesses and foreign investments.
The Risks of a Tax Burden
Current health concerns have temporarily grounded inu:it’s director in Denmark, prompting Gjødvad to step in as acting director. He expresses worry about the implications of the proposed law: “If he needs to go back to Denmark, we face a special tax of 17 to 19 percent on the company’s equity, which was just over DKK 12 million last year. That amounts to a potential tax liability of up to DKK 2.5 million.”
Gjødvad emphasizes that while the director may be in Denmark, the company’s capital remains in Greenland and is fully taxed there. “The director isn’t taking money out of the country. That would be theft,” he asserts, highlighting his commitment to providing jobs and training in Greenland.
A Call for Rethinking Tax Policy
Gjødvad urges lawmakers to reconsider their approach with the proposed special tax. “Greenland continues to allow Danish companies to enter our market, pull in funds, and leave without contributing anything to our society. Why is this happening?”
He insists that the new tax could give outside firms an unfair advantage over local businesses, thereby complicating the operation of Greenlandic companies. “This legislation is making it exceedingly difficult to run a business here,” he states. “It simply boosts the appeal for Danish firms to operate in Greenland while punishing local enterprises.”
Distorting the Competitive Landscape
While acknowledging the complexities of tax regulations, Gjødvad argues that if the special tax is enacted, it will substantially benefit Danish firms at the expense of Greenlandic companies. “The new legislation makes it far more attractive for Danish companies to operate here without incurring taxes,” he points out. “This creates an uneven playing field.”
The Unseen Costs of Foreign Operations
Furthermore, Gjødvad emphasizes that foreign consultants working in Greenland contribute little to the local economy when they exit without paying taxes like corporation tax, dividend tax, or payroll tax. He argues that introducing a modest tax on these entities — perhaps 15 percent on services rendered to municipalities and private individuals — could foster a more equitable environment and encourage local business development.
Throughout his nearly 30 years of entrepreneurial experience in Greenland, Gjødvad claims he has paid over DKK 100 million in taxes, a financial commitment he takes pride in. “I strive to keep my tax obligations rooted in Greenland, even living in Denmark,” he says.
Investments and Future Projects
Looking ahead, Gjødvad is focused on reinvesting the revenue from both inu:it and Inu:it Bolig back into Greenland. He plans to develop 72 homes on the former KNR site in Nuuk, reinforcing his commitment to the local community.
As the Inatsisartut’s finance and tax committee prepares to review the proposed changes to the Income Tax Act, scheduled for April 2, legislators would do well to heed Gjødvad’s call for a fair and balanced approach to taxation.
Despite reaching out for comment, the Naalakkersuisut for Finance and Taxes, led by Múte Bourup Egede, has yet to provide a response to Gjødvad’s criticisms but has indicated that further information will be made available on their website in due course.