Belfast Telegraph

Northern Ireland link to 'Luxleaks' tax scheme

Pharmaceutical firm Warner Chilcott employs development staff in Larne

By Margaret Canning

Pharmaceutical firm Warner Chilcott, which has strong links to Northern Ireland, has emerged as one of hundreds of companies to have availed of complex tax-saving arrangements in Luxembourg.

Warner Chilcott, now part of US firm Actavis, entered into an arrangement in 2009 which enabled it to hold assets through companies in a number of jurisdictions, including Nova Scotia in Canada and Luxembourg.

While the company is based in the Republic, it employs a number of people in research and development in Larne, Co Antrim.

Luxembourg developed corporate law structures enabling companies to save tax - at a time when the current President of the European Commission Jean-Claude Juncker was Finance Minister, and later Prime Minister of the small state.

But Luxembourg's tax practices are now being investigated by the European Commission, creating embarrassment for Juncker.

Actavis could not be reached for comment on its appearance in the 'Luxleaks' - the 340-strong list of companies who benefited from the Luxembourg rules.

Their advanced tax agreements were leaked from the Luxembourg offices of business advisers PwC and disseminated by investigative journalists.

The information has been printed by the Irish Times and the Guardian.

There was no comment from PwC about their negotiation of the agreements, which are legal. Other accountancy firms have also used the structures.

Eamonn Donaghy of KPMG, who has led the campaign for Northern Ireland to be able to set its own rate of corporation tax, said:

"These agreements have been legal for at least 70 years under international tax rules.

"But governments are reluctant to raise income tax levels and instead are increasing the pressure on big companies who use international law to minimise tax."

Some businesses had misused the rules but most acted well within the law, he said. But if the rules were changed, they would be followed by firms and their advisers.

He added that companies have a duty to shareholders to maximise profit.

"If one chief executive doesn't take advantage of the rules, and their competitor does, a company is at a disadvantage."

Irish food firm Glanbia - which recently bought the milk supply business of Fivemiletown Creamery - was another company with Northern Ireland links which put around €1bn into companies in Luxembourg where it had no employees - but which reduced its tax bill in the Republic of Ireland.

A spokeswoman said: "Glanbia can confirm that it has group companies in Luxembourg which are part of inter-group financing arrangements underpinning our international operations."

She said it sought to be internationally competitive but was fully tax-compliant.

Raffaele Russo of the OECD said Lux Leaks showed the need for change.

The structures "are in most cases legal so the problem is not the structures but the rules... what we are doing is changing the rules so that these things are not legal any more."

Background

Warner Chilcott is one of 340 companies to have used tax-saving structures in Luxembourg, leaked documents show. Warner Chilcott was acquired by US firm Actavis last year, but in 2009 bought the branded pharma products of Procter&Gamble.It used Luxembourg structures for that deal.

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