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Tax
Leak details Luxembourg corporate tax deals
From the Financial Times of Thu, 06 Nov 2014 00:08:10 GMT

Leaked documents describing the Luxembourg tax arrangements of more than 340 multinationals were published on Wednesday, stoking the debate over the allegedly favourable tax deals offered by the Grand Duchy.

The International Consortium of Investigative Journalists, a global network based in the US, said it had examined nearly 28,000 pages of leaked documents that laid out special tax deals granted by the Luxembourg tax authorities to some of the world’s largest corporations.

It said its findings showed how hundreds of companies had funnelled hundreds of billions of dollars through Luxembourg and saved billions of dollars in taxes.

It said: “In some instances, the leaked records indicate, companies have enjoyed effective tax rates of less than 1 per cent on the profits they’ve shuffled into Luxembourg.”

The confidential documents mostly concern clients of PwC, the professional services group, which ICIJ said had helped multinational companies obtain at least 548 tax rulings in Luxembourg from 2002 to 2010. The documents are mainly Advance Tax Agreements, which are rulings setting out the way the businesses will be taxed.

The Guardian, one of the news organisations taking part in the six-month investigation, reported that PwC said questions put to it by ICIJ journalists were based on “outdated” and “stolen” information, “the theft of which is in the hands of the relevant authorities”.

The Guardian also said the arrangements were ‘’perfectly legal” and that some corporations would have sought comfort letters from Luxembourg for reasons other than tax avoidance.

Some of the documents in the leak were reported in 2012 by French journalist Edouard Perrin for France 2 and by the BBC. But the majority of the files have never been examined before. Mr Perrin said the documents were “the same secret tax agreements Luxembourg only reluctantly and very partially released when summoned to do so by the European Commission, which is currently investigating the use of tax rulings as a possible illegal state aid”.

The commission is probing whether rulings agreed by the Luxembourg tax authority with Fiat, the car company, and Amazon, the ecommerce company amounted to improper state aid. The cases are particularly sensitive because Jean-Claude Juncker, the new commission president, was premier of the Grand Duchy at the time of the deals. All the countries and companies subject to the state aid probes reject any improper arrangements or wrongdoing.

Last year the ICIJ published an investigation based on more than 2m documents from the British Virgin Islands, in one of the biggest information leaks in history.



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