McDonald’s Post-Brexit Move to the UK Spurs Tax Evasion Worries
McDonald’s is stepping up its efforts to evade global taxes with its post-Brexit decision to move its headquarters to the UK, according to a new report released by a group of US and European trade unions. The report, entitled “Unhappier Meal,” comes on the heels of an earlier exposé published by three trade unions and the War on Want, a non-profit organization dedicated to fighting global poverty, inequality, and injustice, which detailed the company’s alleged attempts at global tax avoidance.
“McDonald’s particular decision to relocate to the UK after that country voted in a referendum to leave the EU raises the possibility of McDonald’s structuring its intellectual property holdings to minimize any oversight by the European Commission,” the report claimed.
The report also points to the fast food chain’s allegedly extensive use of tax havens, including Hong Kong, Bermuda, and the Cayman Islands, to limit both its tax liabilities and its public disclosure obligations.
“McDonald’s interposed a range of subsidiaries in multiple jurisdictions between the newly named McD Europe Franchising LLC and its holding subsidiaries with the effect of reducing the level of transparency and information available in McDonald’s public filings,” the report alleged. “This new corporate structure effectively inhibits public scrutiny, as many of the new entities have no or minimal required public financial disclosures, including of taxes owed and paid.”
Critics allege that because of the company’s complicated and opaque structure, it has successfully avoided an estimated €1billion ($1.2 billion) in corporation tax that it would have otherwise had to pay on royalties generated in 12 different countries in the European Union.
McDonald’s, however, vehemently denies the allegations. “This change aligned our corporate structure with our new functional structure which is no longer in geographies, but in segments that group together countries with common market and growth characteristics,” a McDonald’s spokesperson told media in response to the allegations. “From 2013–2017, McDonald’s paid more than $2.5bn (£1.85bn) in corporate taxes in the European Union, with an average tax rate approaching 27%. Additionally, we pay social, real estate and other taxes.”
The trade unions behind the report say that governments across the globe need to take urgent action to address tax avoidance by implementing anti-tax evasion regulations. It seems that their call to action may have already had some effect. A group of seven cross-party MPs in the UK has sponsored an early day motion (a proposal to debate a specific policy issue, often used to draw attention to a party subject) to discuss the issues raised in the report and urge the government to take action to ensure that companies cannot use the UK to avoid paying taxes.
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