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McDonald’s Luxem-Burger give-away: fat tax deals for fast food company
Fast food company McDonald’s has been enjoying ‘double non-taxation’ in the United States and Luxembourg on the profits it makes in Europe, the European Commission said today. Although tax deals between the company and the Grand Duchy were not ruled illegal, this case illustrates once again how EU member states help big business avoid paying their fair share of tax.
In response, Susana Ruíz, Oxfam’s tax policy lead, said:
“Big business is getting fat on public money and it’s time governments took action instead of super-sizing the profits of huge companies. When large firms like McDonald’s get away without paying their fair share of tax, it’s hospitals and schools in the EU and in the developing world alike that suffer. On top of pharmaceutical companies currently under fire for dodgy tax practices, now McDonald's is also in the spotlight.
“It is good news that Luxembourg is working on new laws to avoid such unfair tax practices in the future. But some EU countries are still among the worst tax havens in the world, and member states continue to resist crucial measures for tax transparency.
“Governments have to stop serving fat tax deals to big companies and start choosing the healthy option: doing what their citizens want by implementing measures for tax transparency like requiring companies to publicly disclose where they make their profits and where they pay their taxes.”
- The European Commission launched its investigation into the tax schemes operated by McDonald’s in Luxembourg in December 2015. The company received significant tax reductions by the way of ‘tax rulings’ issued by Luxembourg authorities since 2009.
- The decision on McDonald’s follows earlier Commission decisions on tax deals by Luxembourg with Amazon, Fiat and Engie, as well as Ireland with Apple and the Netherlands with Starbucks in October 2015. In January 2016, the European Commission has also declared illegal selective tax advantages granted by Belgium under its "excess profit" tax scheme, which has benefitted at least 35 multinational companies. The European Commission is currently investigating the Netherland’s tax deal with Ikea and a UK tax scheme linked with the British Controlled Foreign Company (CFC) rules.
- On Tuesday, 19 September, Oxfam published a report revealing tax avoidance by some of the world’s biggest pharmaceutical companies. Across 16 countries, Merck & Co, Pfizer, Johnson & Johnson, and Abbott appear to dodge an estimated $3.8 billion in tax per year, including an estimated $112 million per year of tax in seven developing countries. This deprives these countries of money that is urgently needed for healthcare and infrastructure.
- In December 2015, the EU adopted a directive aimed at improving the exchange of information on tax rulings given by member states to companies on advance cross-border tax rulings, as well as advance pricing arrangements. However, the public will not be allowed to access this information.
- In July 2016, the European Parliament adopted legislation for so-called public country-by-country reporting, obliging companies to disclose information on profits made and taxes paid for each country they operate in. The Parliament and EU member states have now to agree on a final version of the legislation.
Isabelle Rogerson | Brussels | email@example.com | office +32 2 234 11 29