• Register
Return to: Home > News > Leaked documents show aggressive tax planning practices in Luxembourg

Leaked documents show aggressive tax planning practices in Luxembourg

An investigation into tax planning in Luxembourg by a group of European journalists, published today by UK newspaper the Guardian, has uncovered documents linking over 1,000 multi-national corporations to large-scale tax planning in the country.

A significant number of the files appear related to clients of PwC. Responding to the discovery, PwC described the information contained in the documents as "outdated" and "stolen". The firm added that the theft had been reported to the relevant authorities.

A report published today by the Guardian said the 28,000 leaked pages of tax agreements, returns and other sensitive information pointed to some of the world's largest corporations' "multi-billion dollar tax secrets".

The findings come barely a week after Luxembourg pledged its support for tax transparency as a signatory of the OECD's multilateral competent authority agreement on tax information exchange.

Among the UK and Irish companies implicated are Icap, a trading firm, pharmaceutical company Shire and vacuum cleaner manufacturer Dyson. Others include household names such as Pepsi, Ikea, Procter & Gamble, Burberry, Heinz, Amazon and FedEx.

The documents appear to show companies using "webs of internal loans and interest payments" to significantly reduce their tax dues.

Despite being legal, competitive tax planning practices are being increasingly criticised by the international community. The multilateral competent authority agreement is among the latest example of the mounting focus on harmful tax practices exemplified by initiatives such as the Base Erosion and Profit Shifting (BEPS) programme by the OECD.

Warwick University professor Crawford Spence said although the news did not come as a particular surprise, the details emerged might help garner further attention to the issue of tax planning and criticised Luxembourg for failing to enforce international guidelines.

"We now know that companies and their very well paid tax advisors have concocted all sorts of schemes to avoid paying tax in the countries in which they operate," he said.

He added responsibility for harmful tax practices also rests with the jurisdictions they occur in. "If governments want to collect more tax income from companies, then national legislators need to make a concerted effort to implement OECD guidelines and prevent countries such as Luxembourg from undermining their efforts," he explained.

"Luxembourg is like a corporate version of extraordinary rendition, a place where companies can do their dirty work that would not be permitted at home."



Related stories:

International tax agreement welcomed but worries over implementation linger

Fair corporate tax regime faces uphill task

OECD tax avoidance recommendations: talking the big talk or game changer?

Top Content

    South Africa: sensing new opportunities

    It has been an interesting couple of years for the profession in South Africa. A number of high-profile scandals have brought the profession and the role of auditors into sharp public focus, brewing a distrust towards accountants and a large expectations gap. Joe Pickard reports.

    read more

    Ghana: a quest for consistency

    Ghana’s current economic profile would suggest a fertile landscape for purveyors of accounting services. But inconsistent approaches to compliance and application of standards – coupled with problems in the banking sector and consequent liquidity constraints – have created a challenging environment. Paul Golden writes.

    read more

    Drone technology: audit takes to the skies

    The movement towards a digitised era has already impacted the auditing profession in a number of ways, from blockchain to artificial intelligence. Now firms are taking to sky and using drone technology in their audits. Mishelle Thurai speaks to Big Four firms to find out more.

    read more

    SBC: a new alliance joins the market

    Jonathan Minter speaks to Paul Tutin, chair of founding firm Streets Chartered Accountants, about why the business and its European partners took the decision to launch their own association.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.