GlaxoSmithKline, what a bunch of…
Drugs giant GlaxoSmithKline avoided up to £34m in UK corporation tax last year through a deal with Luxembourg, according to an investigation by the BBC.
The UK firm set up a new company in the European tax haven in 2009 and the next year the subsidiary lent the parent £6.34bn.
In return, the UK firm paid nearly £124m in interest back to the Luxembourg unit – meaning it did not have to pay British corporation tax of 28 per cent on the money.
The Luxembourg tax authorities charged a levy of less than 0.5 per cent – costing GSK just over £300,000, according to Panorama. ‘As a result, GSK potentially avoided up to £34m in UK corporation tax,’ the BBC claimed.
Chancellor George Osborne is trying to crack down on tax avoidance in the UK by major corporations and wealthy individuals. Tax avoidance by big business is reckoned to cost between £1.5bn and £6bn a year.
Former HMRC investigator Richard Brooks said: ‘We’re seeing…exactly how companies avoid tax through a jurisdiction that wants to help them do it.’
GSK struck a deal with HMRC in 2011 and closed down the £6.34bn loan operation through Luxembourg.
Tax expert Richard Murphy said the scheme was ‘absolutely, without a shadow of a doubt, legal’. But he added: ‘I’m still able to ask the question, is this acceptable?
‘Look, this is purely artificial structuring which is designed to undermine the tax revenues of the UK.’
Thanks to Truthman for the story.