Thread by @LHreports

New investigation reveals how Europe’s biggest meat companies benefit from subsidies while avoiding tax on €100s of millions in earnings, deploying “aggressive tax avoidance”

In collaboration with The @Guardian, The @IrishTimes & @FTM_nl we mapped corporate structures of Europe’s leading meat companies, identified group companies in tax havens & analysed their company accounts

Two of the biggest meat companies stood out: Anglo Beef Processors (@AbpFoods), owned by Irish billionaire Larry Goodman & @JBS_oficial, the Brazilian beef giant, world’s largest meat company & owner of @pilgrimsuk and @MoyPark

Together the 2 groups control around ⅓ of UK’s beef& chicken + ¼ of its pork; 30% Ireland’s beef + 50% of its lamb. They’re leading suppliers to almost all major supermarkets, as well as @McDonalds, @NandosUK & @KFC

They’re amongst the few winners of Europe’s dysfunctional food system. While they don’t benefit directly from most agricultural subsidies, the low price they pay farmers for livestock is sustained by public money

Billions of taxpayer subsidies are given to livestock farmers. These subsidies the bridge gap between production costs of raising livestock & farmgate prices paid by meat processors – helping Big Meat make its money

How it works: the meat company sets up a finance company in a tax haven. The finance company borrows money from a group company at 0% interest. It uses that cash to make loans at 4-6% to other group companies in countries where the group actually produces meat

Those interest payments from UK/Ire to Lux/Ned are used to reduce the amount of tax they pay to the UK & Irish tax authorities. Meanwhile, over in the tax havens, the finance companies book the revenues as pure profit, not paying tax on them because of special tax rules

One holding company we identified in the JBS group was Sandstone Holdings. It employs no staff, recorded profits of $160mn between 2017 and 2020 & paid just $299k in tax, an effective average rate of 0.19% [versus 19% UK corp tax]

Within ABP Group we identified a company based in NED, Trojaan Investering. Trojaan had no employees but its accounts showed it made €161mn in profits between 2013-17 on which it paid an effective average tax rate of 0.93% [vs 12.5% Irish & 19% UK corp tax]

MP + @taxinparliament chair @MargaretHodge said @ABP and @Pilgrim’s Pride appeared to be “butchering” the social contract. “A prosperous and equal society is one in which all companies pay their taxes in order to fund the public services that we all rely on”.

@MargaretHodge said: “Yet this important investigation suggests that some of the UK’s biggest meat processing companies might be butchering that social contract by using complex corporate structures and overseas tax havens to avoid paying their fair share.”

Prof Reuven Avi-Yonah from @Umich, specialist in corporate & intern’l tax & member of the steering group for OECD's Network for Tax Research, said schemes resembled those controversial tactics used by #Starbucks & other multinationals a decade ago

Reviewing our findings he said: “This is clearly aggressive tax avoidance. It's not illegal but inconsistent with good corporate citizenship & the public, who are customers of all these meat companies, don't like it.”

Director of @TaxJusticeNet @AlexCobham said the schemes, “Give all the appearance of abusive tax avoidance, designed to prevent the declaration and taxation of profits where they actually arise.”

The findings come amidst the most severe cost of living crisis in 40yrs & as UK Chancellor @KwasiKwarteng announced the cancellation of a planned rise in corporation tax in a bid to boost the flagging UK economy

A spokesperson of ABP said “we have been and remain tax compliant in all jurisdictions in which we operate”.

A spokesperson for JBS USA and Pilgrim’s said: “Pilgrim’s and its subsidiaries work to ensure compliance with all tax laws and regulations of the countries in which the companies operate, as well as openness and transparency in the approach to dealing with tax authorities.”

Great work by lead investigative reporter @MargotGibbs and the reporters involved: @tom_levitt @TiesJoosten @HenkWillemSmits @LionelFaull @ArthurBeesley @LudoHekman

In the @Guardian: These practices aren’t illegal. But the complicated financial structures allow some companies to avoid paying their fair share. It leads to falling income for national governments as taxpayers are forced to pick up the tab.
theguardian.com/environment/20…

In the @IrishTimes the tax strategy of Larry Goodman’s beef empire under spotlight:

irishtimes.com/business/farmi…

At @FTM_nl the Irish billionaire Larry Goodman is introduced: “The billionaire who doesn't like paying taxes, apparently does like receiving subsidies.” (Goodman’s own farms reportedly received €2.8 million in EU subsidies over the past eight years).

ftm.nl/artikelen/big-…

@FTM_nl More details & explanation on the methodology can be found on our website: lighthousereports.nl/investigation/…