By Abhijith Ganapavaram and Tom Bergin/Reuters
McDonald’s said earlier this month it would move its international tax base to the United Kingdom from Luxembourg after coming under increased scrutiny from European Union regulators over its tax arrangements in the small country.
McDonald’s said it would create a new international holding company domiciled in the UK that would receive the majority of royalties from licensing deals outside the United States.
“We are aligning our corporate structure with the way we do business, which is no longer in geographies, but in segments that group together countries with common market and growth characteristics,” McDonald’s said in a statement.
The move will also help to cut costs, McDonald’s said.
A McDonald’s in London/Neil Hall
The reorganization comes amid an investigation by the EU into what it says are sweetheart tax deals that smaller states in the bloc offer to multinational companies to lure jobs and investment.
In August, the EU ordered Apple to pay Ireland unpaid taxes of up to 13 billion euros ($13.8 billion), ruling that the iPhone maker had received illegal state aid.
McDonald’s potentially faced an order from the bloc to pay back taxes of $500 million to Luxembourg, the Financial Times reported in September.
The company said in July it would create more than 5,000 jobs in Britain by the end of 2017, in a sign of its commitment to the country after the vote on June 23 to leave the EU.
A number of international companies have shifted their corporate registration or primary tax residence to the UK since Britain relaxed its rules on the taxation of companies’ foreign subsidiaries in 2012.
These include U.S. lock maker Allegion, U.S. insurer Aon and Italian tractor maker CNH Industrial.
Under UK rules, profits earned by overseas arms or a UK-registered company are effectively exempt from UK tax even if the income is untaxed.
Tax campaigners say this allows companies to shift profits out of the UK before being taxed and then allows companies bring the money back tax-free.
The moves studied by Reuters create few if any jobs and have helped the companies slash their tax bills.
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Previously in Tax Scammage:
* Deepwater Horizon Settlement Comes With $5.35 Billion Tax Windfall.
* Offshoring By 29 Companies Costs Illinois $1.2 Billion Annually.
* Government Agencies Allow Corporations To Write Off Billions In Federal Settlements.
* The Gang Of 62 Vs. The World.
* How The Maker Of TurboTax Fought Free, Simple Tax Filing.
* $1.4 Trillion: Oxfam Exposes The Great Offshore Tax Scam Of U.S. Companies.
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* Wall Street Stock Loans Drain $1 Billion A Year From German Taxpayers.
* German Finance Minister Cries Foul Over Tax Avoidance Deals.
* Prosecutor Targets Commerzbank For Deals That Dodge German Taxes.
* A Schlupfloch Here, A Schlupfloch There. Now It’s Real Money.
* How Milwaukee Landlords Avoid Taxes.
* Study: 32 Illinois Fortune 500 Companies Holding At Least $147 Billion Offshore.
* Watch Out For The Coming Tax Break Trickery.
* When A ‘Tax Bonanza’ Is Actually A Huge Corporate Tax Break.
* The Hypocrisy Of Corporate Welfare: It’s Bigger Than Trump.
* Oxfam Names World’s Worst Tax Havens Fueling ‘Global Race To Bottom.’
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Previously in the Panama Papers:
* The Panama Papers: Remarkable Global Media Collaboration Cracks Walls Of Offshore Tax Haven Secrecy.
* The Panama Papers: Prosecutors Open Probes.
* The [Monday] Papers.
* Adventures In Tax Avoidance.
* Mossack Fonseca’s Oligarchs, Dictators And Corrupt White-Collar Businessmen.
* Jonathan Pie, TV Reporter! They’re All In It Together.
* Meet The Panama Papers Editor Who Handled 376 Reporters In 80 Countries.
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Previously in the carried interest loophole:
* Patriotic Millionaires Vs. Carried Interest.
* The Somewhat Surreal Politics Of A Private Equity Tax Loophole Costing Us Billions (That Obama Refused To Close Despite Pledging To Do So).
* Fact-Checking Trump & Clinton On The Billionaire’s Tax Break.
* Offshore Tax Havens Cost Average Illinois Small Business $5,789 A Year.
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Comments welcome.
Posted on December 17, 2016