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Paradise Papers: Minister says gov't agencies shouldn't practice aggressive tax avoidance

The state development funding agency is in the process of updating its tax payment policies, according to Foreign Trade and Development Minister Kai Mykkänen. The minister’s comment follows Paradise Papers revelations indicating that the agency used an investment fund in the Cayman Islands to finance development projects in Asia.

Kai Mykkänen
Kai Mykkänen Image: Jarno Kuusinen / AOP
Yle News

In the wake of Paradise Paper documents indicating investments in a tax haven fund, Foreign Trade and Development Minister Kai Mykkänen said Tuesday that Finland’s development financing agency Finnfund is currently revising its tax payment policies.

On Monday, Yle’s investigative journalism programme MOT reported that back in 2012, Finnfund invested the equivalent of eight million euros in a Cayman Island fund established to finance agricultural development projects in Asia.

Responding to the disclosures on Yle’s Ykkösaamu morning radio programme on Tuesday, Mykkänen said that Finnfund does not currently invest via tax havens listed by the OECD. He noted that the investment mentioned in the Paradise Papers data leak was made in 2012.

"We are tightening up so that Finnfund cannot use structures in which there is even a hint of aggressive tax avoidance. We should be able to openly report on all the arrangements in which Finnfund is involved," Mykkänen said.

Minister: Investments cannot resemble tax evasion

According to the minister, Finnfund’s fund investments account for less than one-fifth and are even smaller in new ventures.

"The main rule is that we guide Finnfund to make direct investments into target business ventures. In cases where we cannot find other ways to get financing partners, we can use an intermediary in another country, but it cannot resemble tax evasion," Mykkänen explained.

The minister said that confidentiality agreements prevent the government agency from retroactively disclosing details of the tax policy associated with the Cayman Islands investment.

"There are other investors involved. A confidentiality agreement was signed six years ago in accordance with policy at the time," the minister concluded.

Journalists from Yle’s MOT and A-Studio investigative journalism programmes are the only Finnish media involved in reviewing the data haul, which was first obtained by the German newspaper Süddeutsche Zeitung being co-ordinated by the International Consortium of Investigative Journalists (ICIJ). Yle will publish more stories about Finnish individuals and companies mentioned in the Paradise Papers in the days ahead.

The Finnish language stories stemming from the Paradise Papers are available here.

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