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Chasing the corporate tax avoiders & fighting the cuts
Giant multinational brewer SABMiller – the company that owns Grolsch, Peroni, Miller and Castle – avoids an estimated £20m of taxes in Africa and India every year, enough money to educate a quarter-of-a-million children there.
The world’s second biggest brewer uses a complex system of tax havens to siphon as much as £100m of profits out of its African and Indian subsidiaries, depriving those governments of significant amounts of tax. It has more tax haven companies than it does breweries and bottling plants in Africa. In Ghana, SABMiller’s brewery has paid no corporation tax at all for the last two years, despite booming business.
One way in which SABMiller avoids tax is by holding valuable trademarks for African beers in Europe rather than in their country of origin. The cost of using the trademarks helps eat into the profits in the African subsidiary, so less tax is paid there. Other ways of avoiding tax include paying “management fees”, mostly to Switzerland, and routing its procurement services via a subsidiary based in Mauritius.
SABMiller owners of Grolsch are dodging their taxes. Tell their chief executive to schtop! Send an email via Action Aid
‘Do no evil’ says the tech giant but Google Inc cut its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda. Google’s income shifting – involving strategies known to lawyers as the ‘Double Irish’ and the ‘Dutch Sandwich’ – helped reduce its overseas tax rate to 2.4 percent, and that includes tax paid on its activities in the UK, which is its biggest overseas market.
As the Sunday Times reported in 2009: ‘Google avoids paying more than £100m a year in UK tax despite pulling in annual revenues of more than £1.25 billion. Even though the web search engine operates as Google UK Ltd in London, British firms which advertise with it pay their subscriptions to a subsidiary based in Ireland, where corporation tax is far lower than in the UK. This structure, condemned this weekend as “unfair” and “unacceptable”, allowed Google legally to avoid paying £110m of UK tax in 2007, according to research by an expert on corporate tax avoidance.’
It may not be evil, but it’s a mighty big loss to the UK Exchequer.
Firms of Accountants
Where would tax avoiders be without their favourite firms of accountants – PricewaterhouseCoopers, Deloitte, KPMG and Ernst & Young? The Big 4, as they’re called, audit all the biggest companies tax in the world – and no doubt help with their tax structuring too.
Their attitude to tax is clear. As Prof Prem Sikka of Essex University has noted in a research paper, Ernst & Young have said: “Tax is a cost of doing business so, naturally, a good manager will try to manage this cost and the risks associated with it”. He also notes they’ve said of transfer pricing, one of the techniques widely believed to be used to move profits for tax planning purposes, that they provide “creative and practical solutions for … transfer pricing needs.”
No doubt all the Big 4 do the same, and as Prof Sikka notes, they are widely represented in all the major tax havens of the world, including places like Cayman, Bermuda and the Channel Islands.
The biggest culprit is KPMG because they picked up what is thought to be the world’s biggest ever fine for criminal tax fraud, paid in the USA in August 2006. The fine in question? $456 million