Luxembourg’s government was taken by “complete surprise” by the number of files in a report last week detailing hundreds of secret deals that allegedly helped multinationals avoid taxes during Jean-Claude Juncker’s tenure as prime minister.
The publication of more than 500 so-called tax rulings executed by the government between 2002 and 2010 "totally astonished" Luxembourg finance minister Pierre Gramegna, he told journalists yesterday.
"This was an attack on our country like it has never seen before," Mr Gramegna said at a briefing with prime minister Xavier Bettel. "Not for one second did I know that documents would be leaked and that as a government we would have to answer for what happened in the past."
Complex tax deals
More than 340 companies have transferred profits to Luxembourg using complicated tax arrangements, according to leaked documents published by the International Consortium of Investigative Journalists on November 5th. The ICIJ project involved news organisations including
The Irish Times
,
the Guardian
, Süddeutsche Zeitung
and
Le Monde
.
The report, which identified companies such as PepsiCo, Ikea and FedEx, said some corporations effectively lowered their tax bill to less than 1 per cent of profit.
Bettel, who took over from Juncker as prime minister last year, said his country was “in the process of disappearing from gray and black lists and enormous efforts are being put into working on the image”.
“It’s not a coincidence that until now no high-ranking foreign politician has spoken out against the Grand Duchy,” said Bettel. “Finger-pointing against one another is in my view not the right approach.”
State aid rules
Luxembourgis just one of the countries being probed by the
European Commission
about tax deals that may have violated state aid rules. Firms named so far include
Amazon
and
Fiat
Finance and
Trade
in Luxembourg,
Starbucks
Corp in the
Netherlands
and
Apple
in
Ireland
.
EU competition commissioner Margrethe Vestager said last week that while "tax rulings as such" were a common practice, they may be illegal if authorities "accept that a tax base of a specific company is calculated in a favourable way". – (Bloomberg)
