Multinationals will soon be unable to use complex structures such as advanced tax agreements (ATAs) to reduce their corporation tax bills, according to a leading OECD spokesman responding to the LuxLeaks revelations this morning.
Raffaele Russo, head of the OECD’s base erosion profit shifting (Beps) project said the revelations were no surprise but showed once again the need to take action to ensure that multinationals are unable to conclude such agreements with authorities.
The OECD is currently examining how to curtail BEPS schemes, which numerous global firms use to cut their tax payments.
The Irish Times revealed this morning that Irish food multinational Glanbia put more than €1 billion into companies in Luxembourg that have no employees but serve to reduce its tax bill here. Pepsi, IKEA, FedEx and more than 300 other international companies secured similar deals from Luxembourg, as did members of the Sisk construction family.
The companies are the subject of advanced tax agreements (ATAs) negotiated with the tax authorities in Luxembourg and feature in 28,000 pages of leaked documentation from PricewaterhouseCoopers (PwC) in Luxembourg detailing ATAs with multinational companies around the globe.
The leaked documents have been shared by the Washington DC-based International Consortium of Investigative Journalists (ICIJ) with more than 40 media groups around the world, including The Irish Times.
The leaked material also shows how foreign multinationals use Ireland as part of Luxembourg- based structures that reduce their corporation tax bills in the Republic and elsewhere.
“It’s no surprise from our perspective, it just confirms what was the source of the Beps problem and we are addressing it,” said Mr Russo, reacting to the Luxembourg leaks revelations. “What I can say is that the plan is by 2016 these things will be something of the past.”
Mr Russo, who was speaking on RTE’s Morning Ireland said that action being taken by the OECD and other bodies meant that companies would no longer be able to do deal in secret.
He said the Beps project was “not about bashing countries or businesses.”
“Beps is recognition of the fact that these (tax) structures are in most cases legal so the problem is not the structures but the rules....what we are doing is changing the rules so that these things are not legal any more,” he said.
Minister for Finance Michael Noonan is expected to field reporters’ questions on the Luxembourg leaks in Brussels around lunchtime. He will attend a Eurogroup meeting later today.
Other examples of Luxembourg ATAs involving companies operating in Ireland are to be published today online and in The Irish Times tomorrow.
Luxembourg’s tax avoidance industry was developed when the new president of the European Commission, Jean-Claude Juncker, was the finance minister and then the prime minister of the tiny EU member state.
The publication of the PwC documents will come as an embarrassment to Mr Juncker, as Luxembourg’s tax practices are the subject of a commission probe.
