Dozens of companies, including Microsoft Corp, Disney Enterprises Inc and Koch Industries Inc, were dragged into the Luxembourg tax avoidance “LuxLeaks” scandal on Tuesday with the release of new documents by investigative journalists.
The revelations increase pressure on former Luxembourg prime minister Jean-Claude Juncker over the nation’s tax policies during his 19 years in office, and come on the eve of his swearing-in as president of the European Commission.
The new claims emerge from 28,000 pages of documents obtained by the International Consortium of Investigative Journalists (ICIJ) and examined by dozens of newspapers.
The first installment last month revealed hundreds of the world’s biggest companies brokered secret deals with Luxembourg to avoid paying billions of US dollars in taxes.
The new documents detail “aggressive tax structures” brokered for major companies by accountants Ernst & Young Co, KPMG Co, PwC LLP and Deloitte Touche Tohmatsu Ltd between 2003 and 2011, when Juncker was in office.
The documents contain confidential “tax rulings” from Luxembourg officials that “assure companies that they will get favorable treatment for their tax-saving maneuvers,” the consortium said.
The reports claim that Internet calling business Skype Inc, owned by Microsoft, used an Irish subsidiary to allow its Luxembourg unit to report no corporate taxes over five years.
Meanwhile, Disney and Koch Industries had complex arrangements to channel “hundreds of millions of US dollars in profits through Luxembourg” from 2009 to last year and pay little tax, the group said.
Canadian aerospace giant Bombardier Inc and communications firm Telecom Italia SpA are also named in the documents, according to Belgian newspaper Le Soir, which reported that Disney was afforded a 0.28 percent tax rate in the arrangements.
British newspaper the Guardian reported that the documents name major consumer goods company Reckitt Benckiser PLC and Lycra firm Invista Co, owned by the powerful US conservative political donors the Koch brothers.
The scandal has increased political pressure to address tax avoidance, and on Tuesday investigative journalists called on Juncker to make company ownership transparent.
“The ‘LuxLeaks’ scandal is a recent example of the kind of corrosive deals that big companies are able to extract from countries when they think no one will see,” the dozens of international journalists wrote in the open letter.
The leaks last month, which named companies including Apple Inc, Pepsi Co, IKEA and Heinz Co as beneficiaries of tax breaks while Juncker was prime minister, hit less than a week after he took office at the head of the European Commission.
“Subjectively speaking, I have no more to answer for than others,” Juncker said in an interview published yesterday in the French daily Liberation. “But objectively speaking, I was weakened because ‘LuxLeaks’ suggests I was party to maneuvers that do not meet the basic standards of ethics and morality.”
Juncker conceded last month that while he was “not the architect” of the problem, he was “politically responsible” for Luxembourg’s tax practices as prime minister.
The European Commission has fought back on the issue, announcing agreements on Tuesday to close loopholes and to ensure the exchange of tax information among the EU’s 28 member states.
“Current events require us to step up our efforts against corporate tax avoidance and aggressive tax planning on all fronts,” European Commissioner for Economic and Financial Affairs, Taxation and Customs Pierre Moscovici said.
Since June, the commission has also launched investigations into the tax affairs of Amazon Inc and Fiat SpA in Luxembourg, Apple Inc in Ireland and Starbucks Corp in the Netherlands to determine whether sweetheart tax deals could constitute illegal state aid.
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