A Bill Under Fire: Greenland’s Tax Proposal Draws Criticism
In the heart of Greenland’s political landscape, a contentious bill is currently navigating its way through the legislative process. Proposed by Mute B. Egede, the Minister of Finance and Taxes, this initiative aims to tighten tax regulations for companies operating within the territory.
The bill, which recently had its first reading in the Inatsisartut, seeks to ensure that capital generated in Greenland is subject to local taxation before it can be transferred out of the country. However, this proposal has sparked considerable debate, with many pointing to potential negative consequences for local businesses.
Per Laugesen, a certified public accountant and representative of Grønlands Revision A/S, Greenland’s largest auditing firm, has voiced strong objections. He argues that the bill could inadvertently drive companies to shutter their operations. “The legislation incentivizes closures,” Laugesen contends. “Any semblance of investments—from local to foreign—along with generational transitions could incur taxes ranging from 17 to 19 percent.”
He elaborated that this would be an added burden on top of existing corporate tax rates, which can reach as high as 39 percent, compounded by taxes already paid on the initial capital injected into these companies.
A Dismal Future for Foreign Investment?
Laugesen warns that the introduction of a supplementary tax of 17 to 19 percent could deter foreign companies from establishing local management in Greenland. He mentions a concerning scenario: if a director were to resign and the company needs to recruit a temporary replacement from abroad, it risks incurring this hefty tax. “It’s simply preposterous,” he remarks.
Overall, Laugesen believes that the proposed tax structure threatens to double, triple, or even quadruple the tax burden on companies. He calculates that investors could face a staggering 42 percent tax on funds invested within the company, alongside ongoing taxes on income and a potential liquidation tax of 17 to 19 percent, should the business close. To add insult to injury, a 42 percent tax on dividends will also apply if profits are distributed to owners.
“This tells every business owner—from Greenland to Denmark and beyond—that establishing or maintaining a business in Greenland will not be worth the effort,” Laugesen asserts. He underscores the troubling sentiment conveyed by the bill’s comments: “It practically encourages entrepreneurs to either shut down their operations or face even steeper tax rates.”
A Personal Story: The Case of Knud Laursen
Further emphasizing the bill’s ramifications is the story of Knud Laursen, the owner and director of Auto and Marineservice Center (AMS) in Maniitsoq, whose company holds an equity capital of 20 million kroner. If the proposed legislation is enacted, Laursen estimates he could face a tax liability of approximately three million kroner.
Currently, Laursen is receiving treatment for cancer in Denmark and has opted to remain there for the foreseeable future, prioritizing his health. His situation underscores the potential personal and financial strains the new tax regime could impose.
The Finance and Tax Committee of the Inatsisartut is slated to discuss the bill on November 18, with a second reading scheduled for early February 2026. As the discourse unfolds, the implications of this tax proposal continue to echo through the corridors of commerce and governance in Greenland.