by WorldTribune Staff, December 9, 2016
In a sign of its commitment to the UK after Brexit, McDonald’s Corp said on Dec. 8 it would move its international tax base to Britain from Luxembourg.
The company, which said it would create over 5,000 jobs in Britain by the end of 2017, made the move after coming under increased scrutiny from European Union regulators over its tax arrangements in Luxembourg, a report by Reuters said.
McDonald’s said it would create a new international holding company based in Britain that would receive the majority of royalties from licensing deals outside the United States.
Under UK rules, profits earned by overseas arms or a British-registered company are effectively exempt from UK tax even if the income is untaxed.
“We are aligning our corporate structure with the way we do business, which is no longer in geographies, but in segments that group together countries with common market and growth characteristics,” McDonald’s said in a statement.
The EU has ramped up an investigation into what it says are “sweetheart tax deals” that smaller states such as Luxembourg offer to multinational companies to lure jobs and investment.
In August, the EU ordered Apple to pay Ireland unpaid taxes of up to 13 billion euros ($13.8 billion), ruling that the company had received illegal state aid.
McDonald’s potentially faced paying back taxes of $500 million to Luxembourg, the Financial Times reported in September.