Let's stop tax evasion and abolish holding companies

A joint meeting of the Executive Board (Framkvæmdastjórn) and the Policy Board (Málefnastjórn) of the Socialist Party of Iceland demands that the obvious avenues for the rich to evade taxes be closed. A just society cannot be built without a fair tax system. A tax system that favors the rich but burdens the less affluent is unjust, distorts the foundation of society, and amplifies injustice.In a statement by the SocialistsLet's stop tax evasionstates, among other things:“Holding companies with no other operations than asset management are a vehicle for tax evasion and have primarily been established for that purpose. Profits from operating companies, real businesses that produce goods or services, are transferred up to holding companies where there are countless opportunities to defer tax payments and ultimately avoid all tax payments. In the years leading up to the 2008 Crash, massive amounts were transferred in this manner to companies in offshore jurisdictions that paid no taxes in Iceland. After the Crash, tax laws were changed so that companies in foreign low-tax areas were disregarded, and their owners were taxed as if the companies did not exist, were not independent tax entities.Now is the time to take the next steps and do the same with all holding companies, companies that have no operations other than asset management, and tax their owners directly as if the companies did not exist. Dividend payments to holding companies would then be immediately taxed as dividends to the owners in the same proportion as their ownership in the company, and the same would apply to other income such as interest and capital gains.Holding companies have no operational purpose beyond a regular bank account and absolutely no social purpose. They are the main tools of finance-driven capitalism, which has not only weakened society but has also internally eroded companies in real operations, weakened them economically, and confused their strategy. Therefore, there is no social purpose in viewing these companies as independent tax entities. They are primarily tools to siphon money from other companies and society and transfer it to their owners with the fewest possible tax payments.”Drafted and approved at a joint meeting of the Executive Board and the Policy Board of the Socialist Party of Iceland