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OSLO (Reuters) - Norway's $940-billion sovereign wealth fund, the world's largest, is considering moving home two overseas subsidiaries it uses to manage unlisted real estate in Luxembourg and the U.S. state of Delaware, the government said on Thursday.
Last year parliament asked the minority coalition to look at regulating the fund's use of ownership structures located in tax havens.
The move followed the publication of the Panama Papers, which revealed details of corporate and individual tax evasion and triggered a global backlash against tax havens.
The fund was not cited in the Panama Papers and there is no suggestion that the fund has done anything illegal.
"The central bank is considering moving the holding structure for parts of its investments in unlisted property in the fund to Norway," the government said in its revised budget, referring to the way the fund is managed by a unit of the central bank.
"The central bank does not pay taxes but the central bank's daughter companies that belong home in Norway are liable for tax here."
The fund said it had not yet concluded whether it would repatriate the companies.
"The proposal from the Ministry of Finance will, if approved by Parliament, open up establishing Norwegian holding companies for unlisted real estate," said a spokesman for the fund.
"(The central bank) will at that point decide on how this new legislation will impact the holding structures that we have established in Europe and in the U.S. It is too early to be more specific now."
The fund invests mostly in stocks and bonds but it also owns stakes in more than 800 properties in Europe and the United States, with much of the ownership organized through subsidiaries in Luxembourg and the U.S. state of Delaware.
"It is good risk management and standard practice in the real estate industry to invest through subsidiaries," the fund says on its website.
"It is important for the fund that it pays tax in accordance with local rules, but also that it does not incur more tax than necessary. Expected tax costs are therefore among the factors considered when deciding on a holding structure."
Campaigners welcomed the government's proposal.
"The finance ministry is now paving the way for a decision to close down the funds subsidiaries in tax havens and move them to Norway," said Kjetil Abildsnes from the Norwegian Church Aid NGO.
"Illicit financial flows from developing countries were between $620-$970 billon in 2014. It's simply not OK, however legal, to keep using tax havens that facilitate this kind of tax dodging," he told Reuters.
Editing by Toby Chopra