Tax Projections Drop in Denmark
December 21, 2011 Taxation in Denmark
COPENHAGEN – Difficult economic conditions in Denmark are forcing the government to revise its projections for tax collections in 2011 and 2012.
On December 20th the Ministry of Finance of Denmark released the latest Budget Outlook containing, among other economic indicators, new projections regarding the country’s GDP growth and tax revenue forecasts for 2011 and 2012.
According to data contained in the report, the government of Denmark will see its budget deficit expand by DKK 3.1 billion in 2011, and by DKK 16.2 billion in 2012, to a total of DKK 71.25 billion and DKK 100.75 billion respectively. The growing budgetary shortfalls are being attributed to unexpectedly weak economic conditions in Denmark and its main trading partners, and to lower than expected tax revenue levels.
Persistently low levels of corporate tax collections throughout the year have led the Ministry of Finance to revise its estimates for total corporate tax collections in 2011, lowering its projections by DKK 6.3 billion. The Ministry also decreased its estimates for collections in 2012 by DKK 5.7 billion.
Increasingly high unemployment levels have resulted in shortfalls in collections of social security tax, with the Ministry dropping its projection by DKK 500 million for 2011, and DKK 1.25 billion for 2012. Revenues from personal income tax are also estimated to fall by DKK 4 billion in 2011.
The outlook for revenues from value added taxes has been downgraded by DKK 1.4 billion for 2011, and DKK 2.4 billion for 2012, due to weak levels of private consumption and low consumer demand.
In 2011 only revenues from tax on pension portfolios and revenues from levies on oil and gas exploration North Sea are projected to rise, with the Ministry expecting a cumulative DKK 9.4 billion increase for the year.
Photo by Kakadu