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Luxleaks: Juncker's haven forced to move with the times

By Margaret Canning

Companies have long aimed to minimise their taxes, like many ordinary self-employed people do.

But yesterday's Lux Leaks news story of 340 companies who have used entirely legal tax arrangements in Luxembourg is still significant and worth paying attention to.

Luxembourg's evolved into a place that while not exactly a tax haven, was certainly heaven for anyone wanting to cut their tax bill, during the early career of European Commission president Jean-Claude Juncker.

The European Commission has been at the vanguard of calls for other countries to spruce up their tax affairs - particularly the Republic of Ireland, which has been able to attract hundreds of US firms with its attractive corporation tax rate.

But the revelation that billions of dollars of tax has been avoided through Luxembourg - and the availability of the documents detailing the exact deals that were entered into - remind us that things always catch up with you in the end.

Richard Murphy, a campaigner and tax expert, told the International Business Times that Juncker could be feeling hot under the collar because of the state of the eurozone economy at this time.

"It's going into recession. Its member states have one characteristic in common - they are short of tax revenue.

"And yet, as prime minister of Luxembourg, Juncker made it his job to ensure that, frankly, a blind eye was turned to tax avoidance across Europe being facilitated by his tiny Duchy.

"A man who has turned a blind eye to tax avoidance and said no to tackling tax evasion for so long is hardly the man to be leading the commission at this time, a time when tax revenue is the scarcest commodity in Europe."

According to the IB Times, a spokesman for Mr Juncker said he was relaxed about the affair. The EU Commission is to investigate Luxembourg, but Mr Juncker himself will not come under scrutiny for what he may or may not have done in the past.

Eamonn Donaghy of KPMG reminds us that the tax structures are entirely legal and have long been in force.

But public - and political - opinion has changed, and Luxembourg may have to move with the times. But companies will simply find other ways to save tax.

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