Just Confuse the Bastards!

The ongoing outrage over special tax arrangements for big multinational corporations rightly centers currently on Luxembourg and on the brand-new European Commission President Jean-Claude Juncker, under whose premiership all of those advantageous arrangements were agreed there. The accompanying open secret, however, is how Luxembourg is not alone in its guilt in this regard. Ireland was actually pressured to take (limited) measures to rein in its own concessions to tax-avoiding corporations even before the issue blew up recently with the Luxembourg leaks, and EU Commission scrutiny is also being increased on some similar Netherlands measures, particularly what that country may have done to attract Starbucks.

Add to that infamous list Belgium, as well. However, a new report from La Libre Belgique describes one rather unique – indeed, some would say typically Belgian – approach taken there.

InBev
As you can see, the affair involves AB InBev, now the world’s largest brewing company, headquartered in Leuven, just to the East of Brussels. They have plenty of clout to force through their own sweetheart deal with any country that would want to host them, you would think. Indeed in 2011 the Belgian fiscal authorities permitted them to set up a “nameplate company” to which, in the usual fashion, they could use various accounting tricks to steer responsibility for more than €50 million of profits actually earned elsewhere and so be very lightly taxed on them, in most cases not at all.

This organization was set up in Brussels rather than in Leuven, perhaps to provide a sheen of “arms-length” propriety. Imagine its surprise when, last year, it found itself under investigation for its fishy tax arrangements by the Belgian tax inspectorate, the Inspection spéciale des impôts (ISI)!

Clearly, the left hand of Belgium’s tax authorities often does not know what the right hand is doing! This article does not reveal the final resolution of this investigation; it might still be ongoing, although in any event it’s likely that those authorities will go for consistency and call off the inspectors – rather than seize the opportunity presented by this bureaucratic cock-up, that is, to claim back what are surely millions of sorely needed tax-receipts from a scandalous arrangement that some official was browbeaten into approving in the past.

Really, given the mounting public outrage over these sweetheart tax deals you would think the relevant Belgian officials would think again about whether they might just want to shut this one down. It would be very good publicity; AB InBev (originally a truly Belgian company, anyway) is firmly embedded in the country so that it would be costly to move. At least these officials have effectively raised the cost of such arrangements to tax-avoiding multinationals, in the form of the uncertainty that henceforth must be part of their calculus as to whether to deal with the Belgian state.

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