30-10-2020 by Stefan Vermeulen, Nadia El Khannoussi, Sergio Nieto Solis and Manon Dillen
While the Covid recovery is increasing pressure on public finances and raising the prospect of tax increases, this new research from The Investigative Desk with support from the University of Bath shows, for the first time on this scale, which tax avoidance methods the world’s four largest publicly traded tobacco companies are using to minimise their tax bill.
Together, the ‘Big Four’ – British American Tobacco (BAT), Imperial Brands (IB), Japan Tobacco International (JTI) and Philip Morris International (PMI) – generate revenue of more than €80bn.
Six European countries — the UK, Ireland, Belgium, Luxemburg, the Netherlands, and Switzerland – feature prominently in five key tax avoidance methods:
- shifting dividends;
- notional (fictitious) interest deduction;
- profit shifting via intra-firm transactions;
- royalty payments;
- group relief, partly based on internal loans.