Ikea accused of dodging $1.1 billion in corporate taxes

The European Commission has said it will investigate the claims

Hazel Sheffield
Tuesday 16 February 2016 17:55
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Ikea said it paid its taxes in full
Ikea said it paid its taxes in full

Ikea has been accused of avoiding up to €1 billion ($1.1 billion) in corporate taxes between 2009 and 2014, according to a report by Green Party ministers in the European Parliament.

The European Commission has said it will investigate the claims.

In a damning 34-page report, the Green Party said that different parts of Ikea were paying royalties to each other and that the company was shifting profits between Ikea-owned companies, which had the effect of reducing its overall taxes.

Greens also said that European corporate tax reforms that has been presented to the European Commission will still allow companies to practice tax avoidance.

“While this package may address the ‘offshore dimension’ of tax havens, it does not seem to apprehend the reality of tax competition between EU countries themselves,” the Greens said.

Researchers said many of the numbers were estimates, given the lack of internal reporting from Ikea.

Ikea has said that it is fully committed to managing its operations in a responsible and sustainable way.

Ikea makes most of its money in Europe

IKEA Group earned 76 per cent of its revenues in Europe in 2014 and the company’s five largest markets were Germany(14 per cent), the United States (12 per cent), France (8 per cent), the UK (6 per cent) and Russia (6 per cent).

“We pay our taxes in full compliance with national and international tax rules and regulations,” Ikea said in a statement.

"We are committed to further develop our business in Europe and look forward to the continued dialogue on how to develop a harmonized and clear international tax system," it added.

The claims against Ikea come amid growing outrage at corporate tax avoidance.

Chancellor George Osborne faced heavy criticism after he heralded a deal for Google to pay £130 million in back-taxes a “great success”.

Steve Hilton, formerly David Cameron’s director of strategy, said he understood public anger that big companies increasingly appeared to be “above the law”.

Greens called for tax law to be harmonised across Europe to stop multinational companies shopping around to “choose which European countries in which they will enjoy preferential tax treatment”.

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