The tiny European country of Luxembourg has become a tax haven for hundreds of international corporations seeking ways to reduce their tax obligations by billions of dollars.
This discovery, made by the International Consortium of Investigative Journalists (ICIJ) from thousands of pages of leaked documents, involves at least 340 companies, including PepsiCo and FedEx.
While having little or no presence in Luxembourg, corporations have enjoyed huge tax breaks through various accounting schemes and legal maneuvers. “In some instances … companies have enjoyed effective tax rates of less than 1 percent on the profits they’ve shuffled into Luxembourg,” ICIJ reported.
FedEx established two Luxembourg affiliates so it could move money made in Mexico, France and Brazil to Hong Kong. The plan resulted in the shipping giant paying only one quarter of 1% on the earnings involved.