Luxembourg hits back on secret tax deals revelation

Luxembourg has fought back after a report revealed details of hundreds of secret tax deals with multinational companies as Germany’s finance minister said the nation has work to do on complying with global standards.

Luxembourg hits back on secret tax deals revelation

Luxembourg’s government called an emergency press conference with Prime Minister Xavier Bettel and Pierre Gramegna, the finance minister, after the disclosure of tax rulings bestowing low-tax status.

“These rulings, as they have been done in Luxembourg, are in line with international and national rules,” Bettel said. Gramegna said the procedure “is not something that’s particular to Luxembourg. It exists in a lot of countries”.

More than 340 companies have transferred profits to Luxembourg using complicated tax arrangements, according to leaked documents obtained by the International Consortium of Investigative Journalists. The report, which reviewed almost 28,000 documents and identifies companies such as PepsiCo, Ikea, and FedEx, said some corporations effectively lowered their tax bill to less than 1% of profit.

Jean-Claude Juncker, Luxembourg’s prime minister for almost 19 years who took over as commission president on November 1, “is very serene” following the reports, Margaritis Schinas, a spokesman for the commission, said in Brussels.

Juncker told reporters yesterday he will not interfere in the work by anti-trust commissioner Margrethe Vestager. “The commission will do its work — I will not get involved in this. It’s the duty of the competition commissioner, who must be given great freedom of action,” Juncker said.

Gramegna said the commission considers tax rulings in general “in line with European rules” and a policy “that gives companies an assurance and predictability. ‘‘In that sense, the commission finds this is a positive thing,’’ he said.

Bettel, who took over from Juncker as Luxembourg prime minister last year, said he was ‘‘of course not happy about the image that’s being circulated’’ about his country.

Wolfgang Schaeuble, the German finance minister, said Luxembourg has ‘‘a lot to do’’ to meet global tax standards after details of the the report emerged.

Multinationals hold an estimated $2 trillion in low-tax jurisdictions, according to the OECD.

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