McDonald’s ‘dodged tax’ while claiming £872m in Covid support Business News

McDonald’s has claimed £872million in taxpayer-funded Covid support while benefiting from a tax avoidance scheme that will rob the UK government of hundreds of millions of pounds in tax, according to a new report.

The fast food giant paid out a record $3.75billion (£2.8billion) to shareholders in 2020 as its drive-through restaurants remained open while many competitors were forced to close .

Throughout the pandemic, McDonald’s has received £297million in furlough payments, £143million through Eat Out to Help Out, £60million in business fare relief and £372million pounds sterling from a reduction in VAT, according to a study by campaign group War on Want calculated.

McDonald’s did not dispute the figures but said it disagreed with the “inaccurate characterizations used to construct a misleading narrative”.

War on Want has called for an HMRC investigation into the tax affairs of McDonald’s which it says will deprive the UK government of £295million over 10 years using a circular paper transaction.

As part of the 2016 deal, McDonald’s UK subsidiary paid $3.55bn (£2.7bn) for the right to collect fees in Asia from another McDonald’s company in Singapore – a low-tax country.

The money was then returned as a dividend which was not taxable in the UK. McDonald’s was also allowed to claim additional tax relief taking into account the depreciation of Asian duties over time.

Owen Espley, head of the economic justice campaign at War on Want, said McDonald’s shareholder dividends had been “inflated” by public funds during the pandemic.

“McDonald’s funneled billions of its global income through the City of London – but didn’t stop paying its fair share of UK tax,” he said.

“Now UK politicians want ordinary working people to pay for the bailouts received by big business – instead of cracking down on corporate tax cheats. That’s why we’re calling on HMRC to investigate McDonald’s.”

War on Want says an investigation is warranted because the main purpose of McDonald’s structure in Singapore “appears to be to create a tax avoidance scheme”.

This isn’t the first time McDonald’s tax affairs have come under fire. In 2015, unions and activists revealed details of how the company transferred millions through low-tax Luxembourg.

The European Commission’s subsequent investigation found that McDonald’s tax arrangements were unfair, but not illegal.

Profitable businesses have come under pressure to return the financial support they received from the government during the pandemic. Large supermarkets were among the first to return tax breaks they received after reporting bumper sales during lockdowns.

A McDonald’s spokesperson said: “The majority of McDonald’s restaurants in the UK are owned and operated by franchisees who have faced varying challenges as independent local entrepreneurs due to the Covid pandemic and, therefore, have used government measures designed to support businesses and protect jobs. “

McDonald’s announced last week that it would temporarily withdraw from Russia in response to the invasion of Ukraine.

McDonald’s said in a statement that “at this stage, it is impossible to predict when we may reopen our restaurants in Russia.” It continues to pay its 62,500 Russian employees.

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This notice was published: 2022-03-17 01:24:01

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