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Pepsi Bottling Group
10 ноября 2014, 00:26

A "Magical Fairyland" – How Global Multi-National Corporations Avoid Taxes In Luxembourg

Submitted by Michael Krieger via Liberty Blitzkrieg blog, “A Luxembourg structure is a way of stripping income from whatever country it comes from,’’ said Stephen E. Shay, a professor of international taxation at Harvard Law School and a former tax official in the U.S. Treasury Department. The Grand Duchy, he said, “combines enormous flexibility to set up tax reduction schemes, along with binding tax rulings that are unique. It’s like a magical fairyland.”   The deals can be so complex that PwC accountants frequently include “before” and “after” diagrams to illustrate how money flows from subsidiary to subsidiary and across different countries and tax havens. The leaked records show that Luxembourg’s 2009 tax deal for Illinois-based Abbott Laboratories – which makes arthritis drugs and Ensure meal replacement shakes –features 79 steps including companies in Cyprus and Gibraltar. Abbott projected it would invest as much as $50 billion via Luxembourg.   More than 170 of the Fortune 500 companies have a Luxembourg branch, according to Citizens for Tax Justice, a nonprofit research and advocacy group. A total of $95 billion in profits from American corporations’ overseas operations flowed through Luxembourg in 2012, the most current statistics from the U.S. Bureau of Economic Analysis show. On those profits, corporations paid $1.04 billion in taxes to Luxembourg – just 1.1 percent.   – From the ICIJ’s report: Leaked Documents Expose Global Companies’ Secret Tax Deals in Luxembourg The following expose by the International Consortium of Investigative Journalists (ICIJ), at times reads like a movie script. Leaked documents, one of the world’s largest accounting firms, and a retired tax official named Marius Kohl, nicknamed “Monsieur Ruling,” who was described by a Belgian newspaper as “the guardian of the only door through which companies can enter the fiscal paradise of Luxembourg.”  This piece has it all. Here are some choice excerpts: Pepsi, IKEA, FedEx and 340 other international companies have secured secret deals from Luxembourg, allowing many of them to slash their global tax bills while maintaining little presence in the tiny European duchy, leaked documents show. These companies appear to have channeled hundreds of billions of dollars through Luxembourg and saved billions of dollars in taxes, according to a review of nearly 28,000 pages of confidential documents conducted by the International Consortium of Investigative Journalists and a team of more than 80 journalists from 26 countries.   Big companies can book big tax savings by creating complicated accounting and legal structures that move profits to low-tax Luxembourg from higher-tax countries where they’re headquartered or do lots of business. In some instances, the leaked records indicate, companies have enjoyed effective tax rates of less than 1 percent on the profits they’ve shuffled into Luxembourg.   The leaked documents reviewed by ICIJ journalists include hundreds of private tax rulings – sometimes known as “comfort letters” – that Luxembourg provides to corporations seeking favorable tax treatment.   The leaked documents reviewed by ICIJ involve deals negotiated by PricewaterhouseCoopers, one of the world’s largest accounting firms, on behalf of hundreds of corporate clients. To qualify the companies for tax relief, the records show, PwC tax advisers helped come up with financial strategies that feature loans among sister companies and other moves designed to shift profits from one part of a corporation to another to reduce or eliminate taxable income.   The records show, for example, that Memphis-based FedEx Corp. set up two Luxembourg affiliates to shuffle earnings from its Mexican, French and Brazilian operations to FedEx affiliates in Hong Kong. Profits moved from Mexico to Luxembourg largely as tax-free dividends. Luxembourg agreed to tax only one quarter of 1 percent of FedEx’s non-dividend income flowing through this arrangement – leaving the remaining 99.75 percent tax-free.   “A Luxembourg structure is a way of stripping income from whatever country it comes from,’’ said Stephen E. Shay, a professor of international taxation at Harvard Law School and a former tax official in the U.S. Treasury Department. The Grand Duchy, he said, “combines enormous flexibility to set up tax reduction schemes, along with binding tax rulings that are unique. It’s like a magical fairyland.”   FedEx declined comment on the specifics of its Luxembourg tax arrangements. Other companies seeking tax deals from Luxembourg come from private equity, real estate, banking, manufacturing, pharmaceuticals and other industries, the leaked files show. They include Accenture, Abbott Laboratories, American International Group (AIG), Amazon, Blackstone, Deutsche Bank, the Coach handbag empire, H.J. Heinz, JP Morgan Chase, Burberry, Procter & Gamble, the Carlyle Group and the Abu Dhabi Investment Authority.   Disclosure of the leaked documents comes at a sensitive time for Luxembourg, a nation with a population of less than 550,000. Amid the EU probe of Luxembourg’s tax deals, former Luxembourg Prime Minister Jean-Claude Juncker is in his first week in office as president of the European Commission, one of the most powerful positions in the EU. So our old friend Jean-Claude Juncker has reared his crony head. He’s the central planner who famously said: “when it becomes serious, you have to lie.” This is all starting to make perfect sense now… Juncker, Luxembourg’s top leader when many of the jurisdiction’s tax breaks were crafted, has promised to crack down on tax dodging in his new post, but he has also said he believes his own country’s tax regime is in “full accordance” with European law. Under Luxembourg’s system, tax advisers from PwC and other firms can present proposals for corporate structures and transactions designed to create tax savings and then get written assurance that their plan will be viewed favorably by the duchy’s Ministry of Finance.   PwC said ICIJ’s reporting is based on “outdated” and “stolen” information, “the theft of which is in the hands of the relevant authorities.” It said its tax advice and assistance are “given in accordance with applicable local, European and international tax laws and agreements and is guided by a PwC Global Tax Code of Conduct.” I’m certain the “code of conduct” is about as robust as Goldman’s “conflict of interest policy.” U.S. and U.K. companies appeared more frequently in the leaked files than companies from any other country, followed by firms from Germany, Netherlands and Switzerland. Most of the rulings in the stash of documents were approved between 2008 and 2010. Some of them were first reported on in 2012 by Edouard Perrin for France 2 public television and by the BBC, but most of the PwC documents have never before been analyzed by reporters.   The files do not include tax deals sought from Luxembourg authorities through other accounting firms. And many of the documents do not include explicit figures for how much money the companies expected to shift through Luxembourg.   Experts who’ve reviewed the files for ICIJ say the documents do make it clear, though, that the companies and their advisors at PwC engaged in aggressive tax-reduction strategies, using Luxembourg in combination with other tax havens such as Gibraltar, Delaware and Ireland. Yes, Ireland. If you recall, I highlighted the tax avoidance strategy known as the “Double Irish” last year in the post: Shocker! Multinational Corporations Don’t Pay Taxes. The Pepsi Bottling Group Inc., a New York-based unit of PepsiCo, used subsidiaries in Luxembourg to arrange a series of loans among sister companies that allowed the bottler to reduce its tax rate on its $1.4 billion purchase of a controlling interest in JSC Lebedyansky, Russia’s largest juice maker. At least $750 million of the money involved in the Russian deal traveled through a Luxembourg subsidiary named Tanglewood, before landing in a Pepsi subsidiary in Bermuda. Luxembourg acted as a tax-reducing conduit as the profits moved from Russia to Bermuda.   New York-based Coach Inc. set up two Luxembourg entities to move €250 million in Hong Kong earnings in 2011, an amount it expected to approach €1 billion by 2013. One Luxembourg entity acted as an internal corporate bank, allowing much of the luxury goods maker’s Asian operating earnings to glide through a series of foreign entities in the form of interest payments on money the company loaned itself. Filings in Luxembourg showed that in 2012, the company paid €250,000 in taxes on €36.7 million in earnings channeled into Luxembourg – a rate of well under 1 percent.   “This is the first time really that we’ve seen inside the workings of Luxembourg as a tax haven,” said Richard Brooks, a former U.K. tax inspector and author of the book The Great Tax Robbery, who was hired by ICIJ to help review some of the leaked documents. “The countries . . . that are losing money, they don’t know about it, don’t know how it operates at all.”   More than 170 of the Fortune 500 companies have a Luxembourg branch, according to Citizens for Tax Justice, a nonprofit research and advocacy group. A total of $95 billion in profits from American corporations’ overseas operations flowed through Luxembourg in 2012, the most current statistics from the U.S. Bureau of Economic Analysis show. On those profits, corporations paid $1.04 billion in taxes to Luxembourg – just 1.1 percent.   Other tax havens, Ireland for example, openly advertise rock-bottom corporate tax rates of 12.5 percent. Luxembourg instead maintains a statutory tax rate of 29 percent, but the leaked files show that the duchy has routinely approved tax rulings that whittle down what counts as taxable income to practically nothing. This can drop Luxembourg’s effective tax rate deep into single digits.   The deals can be so complex that PwC accountants frequently include “before” and “after” diagrams to illustrate how money flows from subsidiary to subsidiary and across different countries and tax havens. The leaked records show that Luxembourg’s 2009 tax deal for Illinois-based Abbott Laboratories – which makes arthritis drugs and Ensure meal replacement shakes –features 79 steps including companies in Cyprus and Gibraltar. Abbott projected it would invest as much as $50 billion via Luxembourg.   In a 2009 presentation, PwC highlights Luxembourg as a place with “flexible and welcoming authorities” who are “easily contactable” and offer a “readiness for dialogue and quick decision-making process.”   Most of the leaked tax rulings were approved and signed by the same tax official, Marius Kohl, now retired. Sometimes known in tax circles as “Monsieur Ruling,” Kohl was described by one Belgian newspaper as “the guardian of the only door through which companies can enter the fiscal paradise of Luxembourg.” During his time as head of a Luxembourg agency called Sociétés 6, Kohl oversaw the approval of thousands of tax agreements, personally signing as many as 39 in the course of a single day. The Wall Street Journal has reported that since Kohl retired in 2013, it can take up to six months for a tax ruling to be approved.   Corporations that have established toeholds in Luxembourg have made use of financial instruments that shift money around the map to play one country’s tax rules against another. This might be, for instance, a hybrid debt instrument that allows profits to move out of a high-tax EU country to a Luxembourg entity. The profits are treated as interest payments in Luxembourg, where they can be deducted from taxes. In the parent company’s country, they can be treated as dividends and eligible for a tax exemption.   These companies can represent big bucks. From the U.S. alone, direct investment into Luxembourg in 2013 was $416 billion, according to the U.S. Bureau of Economic Analysis. Of that, the vast majority, $343 billion, was in the form of holding companies, which are vehicles to hold securities and financial assets rather than to create local jobs.   Reuters reported in 2012 that Amazon’s Luxembourg arrangements allowed it to have an average tax rate of 5.3 percent on overseas income from 2007 to 2011. Amazon company filings show that in 2013 the on-line merchant reported revenues of $20 billion from its European operations, which are channeled primarily through Luxembourg. With all this tax avoidance, you’d think Amazon would be able to post higher profits. Adding a political twist to the Brussels probes is Juncker’s rise to the presidency of the European Commission. As Luxembourg’s prime minister, he signed into law the provision that allows companies to write off 80 percent of royalty income from intellectual property. Glad to see Juncker’s doing so well. It makes sense, in a global economy run by thieves, lying certainly pays off. Look, I’m not a big fan of taxes to begin with, particularly not within the current system in which there is so much waste and fraud in government. The big point here is this situation once again highlights the stark difference with how the rich and powerful are treated within society and the average person. While the IRS looks to tax complimentary employee lunches and targets organizations based on their political views, multi-nationals with billions of earnings barely pay a dime. Just another example of the neo-feudal vice clamping down on the planet.     

07 ноября 2014, 09:45

Налоговый скандал: секретные сделки в Люксембурге

По данным расследования Международного консорциума журналистов, более 300 крупных компаний, в том числе Apple, Deutsche Bank, Volkswagen, заключали с властями Люксембурга секретные договоренности по снижению налоговых сборов. Международный консорциум журналистов (International Consortium of Investigative Journalists, ICIJ) опубликовал результаты расследования, которое было проведено в течение 6 месяцев с участием 80 журналистов из таких СМИ, как Guardian, Süddeutsche Zeitung, Canadian Broadcasting Corporation, Le Monde, Asahi Shimbun, CNBC, El Confidencial, Le Soir, Folha de S. Paulo, и ряда других. В рамках проекта Luxembourg Leaks было проанализировано около 28 тыс. конфиденциальных документов, попавших в распоряжение журналистов. Часть документов была обнародована в 2012 г. благодаря французскому журналисту Эдуарду Перрену, работающему на телеканале France 2. Однако большая часть документов ранее не была изучена. В ICIJ заявили, что компании могли "провести" сотни миллиардов долларов через Люксембург и сохранить при этом миллиарды долларов налогов. По утверждению журналистов, в период 2002-2010 гг. консалтинговая компания PricewaterhouseCoopers (PwC) помогла транснациональным корпорациям заключить 548 соглашений с властями Люксембурга. Так называемые Advance Tax Agreements устанавливали особые условия налогообложения подразделений различных корпораций, при этом некоторым из них удавалось добиваться договоренностей о налоговых выплатах в размере менее 1% от общей суммы прибылей. В компании PricewaterhouseCoopers (PwC) заявили, что документы, в которых описаны налоговые соглашения, были украдены из ее офиса. Leaked Documents Expose Global Companies’ Secret Tax Deals in Luxembourg "Компания Pepsi Bottling Group, нью-йоркское подразделение концерна PepsiCo, использовала свои филиалы в Люксембурге для привлечения займов своим дочерним подразделениям, что позволило снизить налоговые выплаты при покупке за $1,4 млрд контрольного пакета акций ОАО "Лебедянский", крупнейшего производителя соков в России. По крайней мере $750 млн в рамках данной сделки было проведено через люксембургское подразделение Tanglewood, перед тем как осесть в подразделении Pepsi, зарегистрированном на Бермудских островах. Американская компания FedEx создала два подразделения в Люксембурге с целью перевода прибылей от своей деятельности в Бразилии, Мексике и Франции. Прибыли из Мексики в Люксембург переводились в основном в виде необлагаемых налогом дивидендов. В рамках заключенных договоренностей власти Люксембурга соглашались брать налоги только с 0,25% от потока средств, переводившихся данным образом, оставшиеся 99,75% средств не облагались налогами. Во многих случаях подразделения корпораций, через которые переводились большие суммы денег, поддерживали минимальное присутствие в Люксембурге и не занимались реальной экономической активностью. По одному из адресов – 5, rue Guillaume Kroll,. L-1882 – зарегистрировано более 1 600 подразделений различных корпораций". Данные по компаниям, упомянутым в расследовании ICIJ, представлены в интерактивной базе данных. Как отмечается в расследовании, среди компаний, которые заключили договоренности с властями Люксембурга, представлены крупнейшие корпорации со всего мира. В частности, речь идет о таких компаниях, как Commerzbank, Hypo Real Estate, Volkswagen Group (Германия), Finmecсanica Group, Intesa Sanpaolo Group, UniCredit Group (Италия), China Metallurgical Group Corporation, CNPC (Китай), Сбербанк, "Газпром" (Россия), Apple, Amazon, Blackstone, FedEx, JP Morgan, Heinz, Office Depot, Pepsi Bottling Group, Verizon (США), Aviva, Axa Group, BNP Paribas (Франция), IKEA, SEB (Швеция), и многих других. Данные: ICIJ, Luxembourg Leaks, COMPANIES ASSOCIATED WITH BRITISH VIRGIN ISLANDS Данные: ICIJ, Luxembourg Leaks, COMPANIES ASSOCIATED WITH GERMANY Данные: ICIJ, Luxembourg Leaks, COMPANIES ASSOCIATED WITH ITALY Данные: ICIJ, Luxembourg Leaks, COMPANIES ASSOCIATED WITH CHINA Данные: ICIJ, Luxembourg Leaks, COMPANIES ASSOCIATED WITH UNITED STATES Данные: ICIJ, Luxembourg Leaks, COMPANIES ASSOCIATED WITH RUSSIA Данные: ICIJ, Luxembourg Leaks, COMPANIES ASSOCIATED WITH FRANCE Данные: ICIJ, Luxembourg Leaks, COMPANIES ASSOCIATED WITH SWEDEN В ICIJ отметили, что "консорциум не старается намекнуть или предположить, что компании, представленные в списках, нарушили закон или допустили какие-либо неправомерные действия". Стоит добавить, что консорциум ведет последовательное изучение темы об уклонении от уплаты налогов в глобальном масштабе. В апреле 2014 г. ICIJ инициировал самую масштабную утечку информации по офшорным компаниям, когда-либо попадавшую в СМИ. Журналисты опубликовали результаты изучения документов, которые касались более 120 тыс. компаний, зарегистрированных в офшорной зоне на Британских Виргинских островах. Документы затрагивали финансовые махинации, которые осуществлялись на протяжении последних 30 лет. В ответ на публикацию материалов Luxembourg Leaks в правительстве Люксембурга заявили, что система налогообложения государства конкурентоспособна и "в ней нет ничего несправедливого и аморального". Однако, будучи формально вполне законным, описываемый преференциальный налоговый режим при этом во многом схож с налоговой практикой, которую проводили в Люксембурге компании Amazon и Fiat. В отношении данных компаний власти ЕС вели собственное расследование еще до новых публикаций со стороны ICIJ. Стоит отметить, что в период, которого касаются опубликованные документы, пост премьер-министра Люксембурга занимал Жан-Клод Юнкер. 1 ноября 2014 г. он занял главный пост во властной иерархии ЕС, став председателем Еврокомиссии.

06 ноября 2014, 21:40

Налоговый скандал: секретные сделки в Люксембурге

  По данным расследования Международного консорциума журналистов, более 300 крупных компаний, в том числе Apple, Deutsche Bank, Volkswagen, заключали с властями Люксембурга секретные договоренности по снижению налоговых сборов. Международный консорциум журналистов (International Consortium of Investigative Journalists, ICIJ) опубликовал результаты расследования, которое было проведено в течение 6 месяцев с участием 80 журналистов из таких СМИ, как Guardian, Süddeutsche Zeitung, Canadian Broadcasting Corporation, Le Monde, Asahi Shimbun, CNBC, El Confidencial, Le Soir, Folha de S. Paulo, и ряда других. В рамках проекта Luxembourg Leaks было проанализировано около 28 тыс. конфиденциальных документов, попавших в распоряжение журналистов. Часть документов была обнародована в 2012 г. благодаря французскому журналисту Эдуарду Перрену, работающему на телеканале France 2. Однако большая часть документов ранее не была изучена. В ICIJ заявили, что компании могли "провести" сотни миллиардов долларов через Люксембург и сохранить при этом миллиарды долларов налогов. По утверждению журналистов, в период 2002-2010 гг. консалтинговая компания PricewaterhouseCoopers (PwC) помогла транснациональным корпорациям заключить 548 соглашений с властями Люксембурга. Так называемые Advance Tax Agreements устанавливали особые условия налогообложения подразделений различных корпораций, при этом некоторым из них удавалось добиваться договоренностей о налоговых выплатах в размере менее 1% от общей суммы прибылей. В компании PricewaterhouseCoopers (PwC) заявили, что документы, в которых описаны налоговые соглашения, были украдены из ее офиса.  Leaked Documents Expose Global Companies’ Secret Tax Deals in Luxembourg   "Компания Pepsi Bottling Group, нью-йоркское подразделение концерна PepsiCo, использовала свои филиалы в Люксембурге для привлечения займов своим дочерним подразделениям, что позволило снизить налоговые выплаты при покупке за $1,4 млрд контрольного пакета акций ОАО "Лебедянский", крупнейшего производителя соков в России. По крайней мере $750 млн в рамках данной сделки было проведено через люксембургское подразделение Tanglewood, перед тем как осесть в подразделении Pepsi, зарегистрированном на Бермудских островах. Американская компания FedEx создала два подразделения в Люксембурге с целью перевода прибылей от своей деятельности в Бразилии, Мексике и Франции. Прибыли из Мексики в Люксембург переводились в основном в виде необлагаемых налогом дивидендов. В рамках заключенных договоренностей власти Люксембурга соглашались брать налоги только с 0,25% от потока средств, переводившихся данным образом, оставшиеся 99,75% средств не облагались налогами. Во многих случаях подразделения корпораций, через которые переводились большие суммы денег, поддерживали минимальное присутствие в Люксембурге и не занимались реальной экономической активностью. По одному из адресов – 5, rue Guillaume Kroll,. L-1882 – зарегистрировано более 1 600 подразделений различных корпораций".  Данные по компаниям, упомянутым в расследовании ICIJ, представлены в интерактивной базе данных. Как отмечается в расследовании, среди компаний, которые заключили договоренности с властями Люксембурга, представлены крупнейшие корпорации со всего мира. В частности, речь идет о таких компаниях, как Commerzbank, Hypo Real Estate, Volkswagen Group (Германия), Finmecсanica Group, Intesa Sanpaolo Group, UniCredit Group (Италия), China Metallurgical Group Corporation, CNPC (Китай), Сбербанк, "Газпром" (Россия), Apple, Amazon, Blackstone, FedEx, JP Morgan, Heinz, Office Depot, Pepsi Bottling Group, Verizon (США), Aviva, Axa Group, BNP Paribas (Франция), IKEA, SEB (Швеция), и многих других. Данные: ICIJ, Luxembourg Leaks, COMPANIES ASSOCIATED WITH BRITISH VIRGIN ISLANDS Данные: ICIJ, Luxembourg Leaks, COMPANIES ASSOCIATED WITH GERMANY Данные: ICIJ, Luxembourg Leaks, COMPANIES ASSOCIATED WITH ITALY Данные: ICIJ, Luxembourg Leaks, COMPANIES ASSOCIATED WITH CHINA Данные: ICIJ, Luxembourg Leaks, COMPANIES ASSOCIATED WITH UNITED STATES Данные: ICIJ, Luxembourg Leaks, COMPANIES ASSOCIATED WITH RUSSIA Данные: ICIJ, Luxembourg Leaks, COMPANIES ASSOCIATED WITH FRANCE Данные: ICIJ, Luxembourg Leaks, COMPANIES ASSOCIATED WITH SWEDEN В ICIJ отметили, что "консорциум не старается намекнуть или предположить, что компании, представленные в списках, нарушили закон или допустили какие-либо неправомерные действия". Стоит добавить, что консорциум ведет последовательное изучение темы об уклонении от уплаты налогов в глобальном масштабе. В апреле 2014 г. ICIJ инициировал самую масштабную утечку информации по офшорным компаниям, когда-либо попадавшую в СМИ.  Огромная утечка данных по офшорам в Карибском море Журналисты опубликовали результаты изучения документов, которые касались более 120 тыс. компаний, зарегистрированных в офшорной зоне на Британских Виргинских островах. Документы затрагивали финансовые махинации, которые осуществлялись на протяжении последних 30 лет. В ответ на публикацию материалов Luxembourg Leaks в правительстве Люксембурга заявили, что система налогообложения государства конкурентоспособна и "в ней нет ничего несправедливого и аморального". Однако, будучи формально вполне законным, описываемый преференциальный налоговый режим при этом во многом схож с налоговой практикой, которую проводили в Люксембурге компании Amazon и Fiat. В отношении данных компаний власти ЕС вели собственное расследование еще до новых публикаций со стороны ICIJ. Стоит отметить, что в период, которого касаются опубликованные документы, пост премьер-министра Люксембурга занимал Жан-Клод Юнкер. 1 ноября 2014 г. он занял главный пост во властной иерархии ЕС, став председателем Еврокомиссии.

06 ноября 2014, 00:00

Leaked Docs Expose More Than 340 Companies' Tax Schemes In Luxembourg

This article was reported by the International Consortium of Investigative Journalists, a Washington DC-based global network of 185 reporters in 65 countries who collaborate on transnational investigations.  Pepsi, IKEA, FedEx and 340 other international companies have secured secret deals from Luxembourg, allowing many of them to slash their global tax bills while maintaining little presence in the tiny Central European duchy, leaked documents show. These companies appear to have channeled hundreds of billions of dollars through Luxembourg and saved billions of dollars in taxes, according to a review of nearly 28,000 pages of confidential documents conducted by the International Consortium of Investigative Journalists and a team of more than 80 journalists from 26 countries. Big companies can book big tax savings by creating complicated accounting and legal structures that move profits to low-tax Luxembourg from higher-tax countries where they’re headquartered or do lots of business. In some instances, the leaked records indicate, companies have enjoyed effective tax rates of less than 1 percent on the profits they’ve shuffled into Luxembourg. The leaked documents reviewed by ICIJ journalists include hundreds of private tax rulings – sometimes known as “comfort letters” – that Luxembourg provides to corporations seeking favorable tax treatment. The European Union and Luxembourg have been fighting for months over Luxembourg’s reluctance to turn over information about its tax rulings to the EU, which is investigating whether the country’s tax deals with Amazon and Fiat Finance violate European law. Luxembourg officials have supplied some information to the EU but have refused, EU officials say, to provide a larger set of documents relating to its tax rulings. Today ICIJ and its media partners are releasing a large cache of Luxembourg tax rulings – 548 comfort letters issued from 2002 to 2010 – at www.icij.org and reporting on their contents in stories that will be published or broadcast in dozens of countries. It’s unclear whether any of these documents are among those still being sought by EU investigators, but they are the kinds of documents that go to the heart of the EU’s investigation into Luxembourg’s tax rulings. The leaked documents reviewed by ICIJ involve deals negotiated by PricewaterhouseCoopers, one of the world’s largest accounting firms, on behalf of hundreds of corporate clients. To qualify the companies for tax relief, the records show, PwC tax advisers helped come up with financial strategies that feature loans among sister companies and other moves designed to shift profits from one part of a corporation to another to reduce or eliminate taxable income. The records show, for example, that Memphis-based FedEx Corp. set up two Luxembourg affiliates to shuffle earnings from its Mexican, French and Brazilian operations to FedEx affiliates in Hong Kong. Profits moved from Mexico to Luxembourg largely as tax-free dividends. Luxembourg agreed to tax only one quarter of 1 percent of FedEx’s non-dividend income flowing through this arrangement – leaving the remaining 99.75 percent tax-free. “A Luxembourg structure is a way of stripping income from whatever country it comes from,’’ said Stephen E. Shay, a professor of international taxation at Harvard Law School and a former tax official in the U.S. Treasury Department. The Grand Duchy, he said, “combines enormous flexibility to set up tax reduction schemes, along with binding tax rulings that are unique. It’s like a magical fairyland.” FedEx declined comment on the specifics of its Luxembourg tax arrangements. Other companies seeking tax deals from Luxembourg come from private equity, real estate, banking, manufacturing, pharmaceuticals and other industries, the leaked files show. They include Accenture, Abbott Laboratories, American International Group (AIG), Amazon, Blackstone, Deutsche Bank, the Coach handbag empire, H.J. Heinz, JP Morgan Chase, Burberry, Procter & Gamble, the Carlyle Group and the Abu Dhabi Investment Authority. For their part, Luxembourg’s officials and defenders say the landlocked nation’s system of private tax agreements is above reproach. “No way are these sweetheart deals,” Nicolas Mackel, chief executive of Luxembourg for Finance, a quasi-governmental agency, said in an interview with ICIJ. “The Luxembourg system of taxation is competitive – there is nothing unfair or unethical about it,” Mackel said. “If companies manage to reduce their tax bills to a very low rate, that’s a problem not of one tax system but of the interaction of many tax systems.” Less than 1 percent Disclosure of the leaked documents comes at a sensitive time for Luxembourg, a nation with a population of less than 550,000. Amid the EU probe of Luxembourg’s tax deals, former Luxembourg Prime Minister Jean-Claude Juncker is in his first week in office as president of the European Commission, one of the most powerful positions in the EU. Juncker, Luxembourg’s top leader when many of the jurisdiction’s tax breaks were crafted, has promised to crack down on tax dodging in his new post, but he has also said he believes his own country’s tax regime is in “full accordance” with European law. Under Luxembourg’s system, tax advisers from PwC and other firms can present proposals for corporate structures and transactions designed to create tax savings and then get written assurance that their plan will be viewed favorably by the duchy’s Ministry of Finance. “It’s like taking your tax plan to the government and getting it blessed ahead of time,” Richard D. Pomp, a tax law professor at the University of Connecticut School of Law, said. “And most are blessed. Luxembourg has a very user-friendly tax department.” The private deals are legal in Luxembourg but may be subject to legal challenge outside the country if tax officials in other nations view them as improper. Luxembourg’s Ministry of Finance said in a statement that “advance tax decisions” are “well established in many EU member states, such as Germany, France, the Netherlands, the U.K., and Luxembourg” and that they don’t conflict with European law as long as “all taxpayers in a similar situation are treated equally.” PwC said ICIJ’s reporting is based on “outdated” and “stolen” information, “the theft of which is in the hands of the relevant authorities.” It said its tax advice and assistance are “given in accordance with applicable local, European and international tax laws and agreements and is guided by a PwC Global Tax Code of Conduct.” In its statement PwC said media do not have “a complete understanding of the structures involved.” While the company can’t comment on specific client matters, it rejects “any suggestion that there is anything improper about the firm’s work.” ICIJ and its media partners used corporate balance sheets, regulatory filings and court records to put the leaked tax rulings in context. News organizations that have worked together on the six-month investigation include The Guardian, Süddeutsche Zeitung and NDR/WDR in Germany, the Canadian Broadcasting Corporation, Le Monde, Japan’s Asahi Shimbun, CNBC, Denmark’s Politiken, Brazil’s Folha de S. Paulo and others. U.S. and U.K. companies appeared more frequently in the leaked files than companies from any other country, followed by firms from Germany, Netherlands and Switzerland. Most of the rulings in the stash of documents were approved between 2008 and 2010. Some of them were first reported on in 2012 by Edouard Perrin for France 2 public television and by the BBC, but most of the PwC documents have never before been analyzed by reporters. The files do not include tax deals sought from Luxembourg authorities through other accounting firms. And many of the documents do not include explicit figures for how much money the companies expected to shift through Luxembourg. Experts who’ve reviewed the files for ICIJ say the documents do make it clear, though, that the companies and their advisors at PwC engaged in aggressive tax-reduction strategies, using Luxembourg in combination with other tax havens such as Gibraltar, Delaware and Ireland. The documents show that: The Pepsi Bottling Group Inc., a New York-based unit of PepsiCo, used subsidiaries in Luxembourg to arrange a series of loans among sister companies that allowed the bottler to reduce its tax rate on its $1.4 billion purchase of a controlling interest in JSC Lebedyansky, Russia’s largest juice maker. At least $750 million of the money involved in the Russian deal traveled through a Luxembourg subsidiary named Tanglewood, before landing in a Pepsi subsidiary in Bermuda. Luxembourg acted as a tax-reducing conduit as the profits moved from Russia to Bermuda. New York-based Coach Inc. set up two Luxembourg entities to move €250 million in Hong Kong earnings in 2011, an amount it expected to approach €1 billion by 2013. One Luxembourg entity acted as an internal corporate bank, allowing much of the luxury goods maker’s Asian operating earnings to glide through a series of foreign entities in the form of interest payments on money the company loaned itself. Filings in Luxembourg showed that in 2012, the company paid €250,000 in taxes on €36.7 million in earnings channeled into Luxembourg – a rate of well under 1 percent. IKEA has used Luxembourg as part of a tax-savings strategy almost as complicated as the retail chain’s ready-to-assemble furniture. IKEA operates through two independent groups of companies: IKEA Group, which controls most of the 364 iconic IKEA big-box stores and Inter IKEA Group, which oversees franchise operations. Inter IKEA’s structure includes a Luxembourg holding company, a Luxembourg finance company, a Liechtenstein foundation and a Swiss finance arm. Leaked documents show IKEA’s Luxembourg operations opened the Swiss subsidiary in 2009 to outsource part of their financing operations to yet another low-tax jurisdiction, allowing the company to save taxes both in Luxembourg and in Switzerland. Belgium’s richest family, the billionaire de Spoelberch dynasty, obtained a private tax ruling from Luxembourg in 2008. The de Spoelberch clan, part of the country’s old nobility and close to the royal family, holds a big stake in ABInbev, the world’s biggest brewer whose labels include Budweiser, Stella Artois, Corona and Beck’s. The records indicate the de Spoelberch’s routed €2 billion through Ireland and then Luxembourg, reducing taxes with each step. The only sign of Luxembourg companies controlled by the family appears to be a small letter box at an address that lists nearly 190 other companies. Even the Canadian government got a private Luxembourg tax ruling. In 2008, the Public Sector Pension Investment Board, which manages pensions for all Canadian federal employees, including the Royal Canadian Mounted Police, bought real estate in Berlin. The pension board set up Luxembourg companies that helped it sidestep German land transfer taxes. A complex internal loan structure allowed the board to pay minimal taxes in Luxembourg on income from the German properties. The investment board has a Luxembourg office – a place where desks can be rented by the month and where two employees watch over600 million in European investments.  The Canadian pension board and Inter IKEA both said their tax planning complies with all laws and regulations. The Canadian fund argues that because it has tax-exempt status in Canada, it ultimately gained “no tax advantage” by routing investments through Luxembourg. Inter IKEA said its total effective corporate income tax rate is currently around 14 percent. Pepsi, Coach and an accountant for the de Spoelberch family’s Luxembourg holdings declined to comment on the specifics of their tax arrangements. “This is the first time really that we’ve seen inside the workings of Luxembourg as a tax haven,” said Richard Brooks, a former U.K. tax inspector and author of the book The Great Tax Robbery, who was hired by ICIJ to help review some of the leaked documents. “The countries . . . that are losing money, they don't know about it, don’t know how it operates at all.”  Gilded Age Last month, in the Gilded Age splendor of New York’s private Metropolitan Club, Pierre Gramegna, Luxembourg’s minister of finance, tried to woo the Wall Street crowd with some premier cru wine and a little levity. He told assembled financiers that he wanted to dispel the myth that his tiny country is nothing more than a tax haven: “Luxembourg is not an offshore place. I say it loud and clear.” What he got back was hearty round of laughter. In the wake of the EU’s probe of its tax practices, Luxembourg officials continue to bristle at their nation’s tax haven label. The country, a founding member of the EU, boasts of being a multi-lingual nation in the heart of Europe with a business-friendly and stable government. Once primarily a steel-maker and manufacturer, Luxembourg has transitioned into a financial center rivaling London, New York or Hong Kong. With $3.7 trillion in assets under management by banks and other institutions, Luxembourg is second only to the U.S. as a global investment center. More than 170 of the Fortune 500 companies have a Luxembourg branch, according to Citizens for Tax Justice, a nonprofit research and advocacy group. A total of $95 billion in profits from American corporations’ overseas operations flowed through Luxembourg in 2012, the most current statistics from the U.S. Bureau of Economic Analysis show. On those profits, corporations paid $1.04 billion in taxes to Luxembourg – just 1.1 percent. Other tax havens, Ireland for example, openly advertise rock-bottom corporate tax rates of 12.5 percent. Luxembourg instead maintains a statutory tax rate of 29 percent, but the leaked files show that the duchy has routinely approved tax rulings that whittle down what counts as taxable income to practically nothing. This can drop Luxembourg’s effective tax rate deep into single digits. Less than 30 percent of the tax deals in the leaked documents include a specific figure for the amount of money that companies said they planned to “invest” through the Luxembourg agreements. The total for those deals was roughly $215 billion between 2002 and 2010. The figure would likely grow to several hundred billion dollars if projected investments in other deals in the leaked PwC documents were included. And the overall figure for money shuffled through Luxembourg as the result of confidential tax agreements would grow even larger if tax deals arranged through other accounting firms were included. PwC’s letters seeking special tax rulings were usually 20 to 100 pages long. They detail various financial strategies and then specify the tax treatment the accountants expect to get for their clients – suggesting, for example, that dividends be treated as tax-free interest. The leaked tax rulings indicate that negotiations were conducted in private meetings between PwC accountants and Luxembourg tax officials. PwC’s written proposals were often approved the same day they were submitted. The deals can be so complex that PwC accountants frequently include “before” and “after” diagrams to illustrate how money flows from subsidiary to subsidiary and across different countries and tax havens. The leaked records show that Luxembourg’s 2009 tax deal for Illinois-based Abbott Laboratories – which makes arthritis drugs and Ensure meal replacement shakes – features 79 steps including companies in Cyprus and Gibraltar. Abbott projected it would invest as much as $50 billion via Luxembourg. A spokesperson for Abbott declined comment. In a 2009 presentation, PwC highlights Luxembourg as a place with “flexible and welcoming authorities” who are “easily contactable” and offer a “readiness for dialogue and quick decision-making process.” Most of the leaked tax rulings were approved and signed by the same tax official, Marius Kohl, now retired. Sometimes known in tax circles as “Monsieur Ruling,” Kohl was described by one Belgian newspaper as “the guardian of the only door through which companies can enter the fiscal paradise of Luxembourg.” During his time as head of a Luxembourg agency called Sociétés 6, Kohl oversaw the approval of thousands of tax agreements, personally signing as many as 39 in the course of a single day. The Wall Street Journal has reported that since Kohl retired in 2013, it can take up to six months for a tax ruling to be approved. A woman who answered the phone at Kohl’s home told an ICIJ reporter that he wasn’t interested in talking. In a recent interview with The Wall Street Journal, Kohl said: “The work I did definitely benefited the country, though maybe not in terms of reputation.” When a Journal reporter asked whether the prices that companies’ Luxembourg affiliates charged sister companies outside the country for the use of intellectual property and other services were accurate, Kohl licked his thumb and held it in the air. “There was no way to verify it,” he said. Financial Power Luxembourg’s economy benefits from a growing cadre of lawyers, accountants, and financiers who are hired to appear before the tax authorities. PwC, for example, said in 2013 that it had more than 2,300 employees in Luxembourg and that it expected to add another 600 in 2014. Sprawling office parks of high-rise towers, not unlike those outside of Dallas or in northern Virginia, bustle with energy. Construction cranes dot the skyline. The International Monetary Fund reports that Luxembourg has the planet’s highest economic output per capita – $112,473 per person in 2013, more than double the United States ($53,001), France ($44,099) and the United Kingdom ($39,372). “Luxembourg is not what people think it is when you think of a tax haven,’’ Mackel, CEO of Luxembourg for Finance, said. “We make steel and car components and have a logistics industry. Our financial center is diverse with first class funds, insurance, corporate finance and Europe’s leading stock exchange. Luxembourg is about much more than this one issue they try to make of it.’’ Still, Luxembourg has many ways to cut tax bills not always seen elsewhere. For example, some 80 percent of royalties on earnings from intellectual property – software copyrights, patents and trademarks, for instance – are exempt from taxes. Corporations that have established toeholds in Luxembourg have made use of financial instruments that shift money around the map to play one country’s tax rules against another. This might be, for instance, a hybrid debt instrument that allows profits to move out of a high-tax EU country to a Luxembourg entity. The profits are treated as interest payments in Luxembourg, where they can be deducted from taxes. In the parent company's country, they can be treated as dividends and eligible for a tax exemption. The EU recently banned the use of hybrid loans that exploit tax mismatches between country tax systems for companies headquartered in Europe. Luxembourg and other EU members have until the end of 2015 to enact the ban into law within their own borders. As in many tax havens, a Luxembourg office can be just a mailbox. Office buildings throughout the city are filled with brand-name corporate nameplates and little else. Some have offices and no visible employees. One building at 5 Rue Guillaume Kroll is home to more than 1,600 companies; another at 2 Avenue Charles de Gaulle houses roughly 1,450; and a building at 46A Avenue J.F. Kennedy is home to at least 1,300, according to an ICIJ analysis of Luxembourg’s corporate registry. These companies can represent big bucks. From the U.S. alone, direct investment into Luxembourg in 2013 was $416 billion, according to the U.S. Bureau of Economic Analysis. Of that, the vast majority, $343 billion, was in the form of holding companies, which are vehicles to hold securities and financial assets rather than to create local jobs. In fact, Luxembourg represents a tiny fraction of 1 percent – 0.13 percent in 2010 – of all overseas jobs with American companies, indicating it is a place that houses money more than it provides employment. In 2011 Luxembourg passed new rules requiring that Luxembourg-based companies that serve as internal banks for larger corporate structures station a majority of their managers and board members in the Grand Duchy. It’s unclear how these rules are enforced and the Ministry of Finance did not respond to ICIJ’s questions about mailbox companies in Luxembourg. EU probe Luxembourg’s freewheeling ways are gaining it few friends in nearby Brussels, the EU’s headquarters. The European Commission, the administrative arm of the EU, is investigating whether Luxembourg’s tax rulings for Amazon and Fiat Finance constitute illegal state aid, violating rules that bar EU members from offering deals to one company that are not available to all. “In the current context of tight public budgets, it is particularly important that large multinationals pay their fair share of taxes,” Joaquín Almunia, the commission’s vice president for competition policy until last week, said earlier this year in announcing EU probes into tax practices in Ireland, The Netherlands and Luxembourg. Reuters reported in 2012 that Amazon’s Luxembourg arrangements allowed it to have an average tax rate of 5.3 percent on overseas income from 2007 to 2011. Amazon company filings show that in 2013 the on-line merchant reported revenues of $20 billion from its European operations, which are channeled primarily through Luxembourg. The commission’s Amazon probe focuses on one of the online retailer’s key companies in Luxembourg, Amazon EU S.à.r.l., which handles services to Amazon’s European customers. The commission argues that a generous 2003 tax ruling by Luxembourg authorities allows Amazon EU S.à.r.l. to funnel millions of euros in tax-deductible royalties each year to yet another Amazon company in Luxembourg, a limited partnership that is tax exempted. This tax break and others like it allow Amazon to pay little in taxes in the Grand Duchy on its European sales. The leaked PwC documents show that in 2009 Amazon EU S.à.r.l. reported more than €519 million in royalty expenses while the limited partnership Amazon Europe Holding Technologies SCS had an influx of the same amount “based on agreements with affiliated companies.” Thanks to the royalty expenses and other deductions, Amazon EU S.à.r.l. posted a taxable profit of just €14.8 million and paid €4.1 million in taxes in Luxembourg. Amazon did not respond to ICIJ’s requests for comment. As EU authorities are pushing their corporate tax probes, a leading multinational group, the Organization for Economic Cooperation and Development, has proposed a new set of rules that would bar companies from using many common practices to shift profits into tax havens. Approval of the OECD’s proposals, however, is uncertain and years away. Gramegna, Luxembourg’s finance minister, said in an interview with ICIJ in New York that “the European Commission is entitled, by treaty, to look after fair competition and at state aid. They decided to look into Amazon. We are telling the European Commission that everything we’ve done has been within the general principles of the European Union and the OECD.” Adding a political twist to the Brussels probes is Juncker’s rise to the presidency of the European Commission. As Luxembourg’s prime minister, he signed into law the provision that allows companies to write off 80 percent of royalty income from intellectual property. In a speech in July in Brussels, Juncker promised to “fight tax evasion and tax dumping. … We will try to put some morality, some ethics, into the European tax landscape.” But he also recently told German television: “No one has ever been able to make a convincing and thorough case to me that Luxembourg is a tax haven. Luxembourg employs tax rules that are in full accordance with European law.” At a press conference two weeks ago, Juncker promised he wouldn’t try to influence regulatory cases involving Luxembourg: “I won't abuse my position in order to pressure commissioners to make different decisions regarding Luxembourg than they would regarding similar cases.” Many observers are skeptical Luxembourg and its allies will give up the country’s flexible tax regime without a battle. Jürgen Kentenich, chief tax fraud investigator in the German city of Trier, which lies near the border with Luxembourg, worries that big companies and their accountants will keep finding ways to take advantage of the deals offered by Luxembourg and other financial havens, while smaller companies and average taxpayers are left to make up the what’s lost in tax revenues. “It’s always the same story,” he said in an interview with ICIJ’s partner, the Canadian Broadcasting Corporation. Accounting firms are always coming up with fresh ways to cut tax bills “and lawmakers and tax authorities are always behind, always chasing.” Margot Williams, Edouard Perrin, Emilia Díaz-Struck, Delphine Reuter, Frédéric Zalac, Harvey Cashore, Lars Bové, Kristof Clerix, Julia Stein, Titus Plattner, Mario Stäuble, Minna Knus-Galán, Matthew Caruana-Galizia, Rigoberto Carvajal, Christoph Lütgert and Neil Chenoweth contributed to this story.   

06 ноября 2014, 00:00

Leaked Docs Expose More Than 340 Companies' Tax Schemes In Luxembourg

This article was reported by the International Consortium of Investigative Journalists, a Washington DC-based global network of 185 reporters in 65 countries who collaborate on transnational investigations.  Pepsi, IKEA, FedEx and 340 other international companies have secured secret deals from Luxembourg, allowing many of them to slash their global tax bills while maintaining little presence in the tiny Central European duchy, leaked documents show. These companies appear to have channeled hundreds of billions of dollars through Luxembourg and saved billions of dollars in taxes, according to a review of nearly 28,000 pages of confidential documents conducted by the International Consortium of Investigative Journalists and a team of more than 80 journalists from 26 countries. Big companies can book big tax savings by creating complicated accounting and legal structures that move profits to low-tax Luxembourg from higher-tax countries where they’re headquartered or do lots of business. In some instances, the leaked records indicate, companies have enjoyed effective tax rates of less than 1 percent on the profits they’ve shuffled into Luxembourg. The leaked documents reviewed by ICIJ journalists include hundreds of private tax rulings – sometimes known as “comfort letters” – that Luxembourg provides to corporations seeking favorable tax treatment. The European Union and Luxembourg have been fighting for months over Luxembourg’s reluctance to turn over information about its tax rulings to the EU, which is investigating whether the country’s tax deals with Amazon and Fiat Finance violate European law. Luxembourg officials have supplied some information to the EU but have refused, EU officials say, to provide a larger set of documents relating to its tax rulings. Today ICIJ and its media partners are releasing a large cache of Luxembourg tax rulings – 548 comfort letters issued from 2002 to 2010 – at www.icij.org and reporting on their contents in stories that will be published or broadcast in dozens of countries. It’s unclear whether any of these documents are among those still being sought by EU investigators, but they are the kinds of documents that go to the heart of the EU’s investigation into Luxembourg’s tax rulings. The leaked documents reviewed by ICIJ involve deals negotiated by PricewaterhouseCoopers, one of the world’s largest accounting firms, on behalf of hundreds of corporate clients. To qualify the companies for tax relief, the records show, PwC tax advisers helped come up with financial strategies that feature loans among sister companies and other moves designed to shift profits from one part of a corporation to another to reduce or eliminate taxable income. The records show, for example, that Memphis-based FedEx Corp. set up two Luxembourg affiliates to shuffle earnings from its Mexican, French and Brazilian operations to FedEx affiliates in Hong Kong. Profits moved from Mexico to Luxembourg largely as tax-free dividends. Luxembourg agreed to tax only one quarter of 1 percent of FedEx’s non-dividend income flowing through this arrangement – leaving the remaining 99.75 percent tax-free. “A Luxembourg structure is a way of stripping income from whatever country it comes from,’’ said Stephen E. Shay, a professor of international taxation at Harvard Law School and a former tax official in the U.S. Treasury Department. The Grand Duchy, he said, “combines enormous flexibility to set up tax reduction schemes, along with binding tax rulings that are unique. It’s like a magical fairyland.” FedEx declined comment on the specifics of its Luxembourg tax arrangements. Other companies seeking tax deals from Luxembourg come from private equity, real estate, banking, manufacturing, pharmaceuticals and other industries, the leaked files show. They include Accenture, Abbott Laboratories, American International Group (AIG), Amazon, Blackstone, Deutsche Bank, the Coach handbag empire, H.J. Heinz, JP Morgan Chase, Burberry, Procter & Gamble, the Carlyle Group and the Abu Dhabi Investment Authority. For their part, Luxembourg’s officials and defenders say the landlocked nation’s system of private tax agreements is above reproach. “No way are these sweetheart deals,” Nicolas Mackel, chief executive of Luxembourg for Finance, a quasi-governmental agency, said in an interview with ICIJ. “The Luxembourg system of taxation is competitive – there is nothing unfair or unethical about it,” Mackel said. “If companies manage to reduce their tax bills to a very low rate, that’s a problem not of one tax system but of the interaction of many tax systems.” Less than 1 percent Disclosure of the leaked documents comes at a sensitive time for Luxembourg, a nation with a population of less than 550,000. Amid the EU probe of Luxembourg’s tax deals, former Luxembourg Prime Minister Jean-Claude Juncker is in his first week in office as president of the European Commission, one of the most powerful positions in the EU. Juncker, Luxembourg’s top leader when many of the jurisdiction’s tax breaks were crafted, has promised to crack down on tax dodging in his new post, but he has also said he believes his own country’s tax regime is in “full accordance” with European law. Under Luxembourg’s system, tax advisers from PwC and other firms can present proposals for corporate structures and transactions designed to create tax savings and then get written assurance that their plan will be viewed favorably by the duchy’s Ministry of Finance. “It’s like taking your tax plan to the government and getting it blessed ahead of time,” Richard D. Pomp, a tax law professor at the University of Connecticut School of Law, said. “And most are blessed. Luxembourg has a very user-friendly tax department.” The private deals are legal in Luxembourg but may be subject to legal challenge outside the country if tax officials in other nations view them as improper. Luxembourg’s Ministry of Finance said in a statement that “advance tax decisions” are “well established in many EU member states, such as Germany, France, the Netherlands, the U.K., and Luxembourg” and that they don’t conflict with European law as long as “all taxpayers in a similar situation are treated equally.” PwC said ICIJ’s reporting is based on “outdated” and “stolen” information, “the theft of which is in the hands of the relevant authorities.” It said its tax advice and assistance are “given in accordance with applicable local, European and international tax laws and agreements and is guided by a PwC Global Tax Code of Conduct.” In its statement PwC said media do not have “a complete understanding of the structures involved.” While the company can’t comment on specific client matters, it rejects “any suggestion that there is anything improper about the firm’s work.” ICIJ and its media partners used corporate balance sheets, regulatory filings and court records to put the leaked tax rulings in context. News organizations that have worked together on the six-month investigation include The Guardian, Süddeutsche Zeitung and NDR/WDR in Germany, the Canadian Broadcasting Corporation, Le Monde, Japan’s Asahi Shimbun, CNBC, Denmark’s Politiken, Brazil’s Folha de S. Paulo and others. U.S. and U.K. companies appeared more frequently in the leaked files than companies from any other country, followed by firms from Germany, Netherlands and Switzerland. Most of the rulings in the stash of documents were approved between 2008 and 2010. Some of them were first reported on in 2012 by Edouard Perrin for France 2 public television and by the BBC, but most of the PwC documents have never before been analyzed by reporters. The files do not include tax deals sought from Luxembourg authorities through other accounting firms. And many of the documents do not include explicit figures for how much money the companies expected to shift through Luxembourg. Experts who’ve reviewed the files for ICIJ say the documents do make it clear, though, that the companies and their advisors at PwC engaged in aggressive tax-reduction strategies, using Luxembourg in combination with other tax havens such as Gibraltar, Delaware and Ireland. The documents show that: The Pepsi Bottling Group Inc., a New York-based unit of PepsiCo, used subsidiaries in Luxembourg to arrange a series of loans among sister companies that allowed the bottler to reduce its tax rate on its $1.4 billion purchase of a controlling interest in JSC Lebedyansky, Russia’s largest juice maker. At least $750 million of the money involved in the Russian deal traveled through a Luxembourg subsidiary named Tanglewood, before landing in a Pepsi subsidiary in Bermuda. Luxembourg acted as a tax-reducing conduit as the profits moved from Russia to Bermuda. New York-based Coach Inc. set up two Luxembourg entities to move €250 million in Hong Kong earnings in 2011, an amount it expected to approach €1 billion by 2013. One Luxembourg entity acted as an internal corporate bank, allowing much of the luxury goods maker’s Asian operating earnings to glide through a series of foreign entities in the form of interest payments on money the company loaned itself. Filings in Luxembourg showed that in 2012, the company paid €250,000 in taxes on €36.7 million in earnings channeled into Luxembourg – a rate of well under 1 percent. IKEA has used Luxembourg as part of a tax-savings strategy almost as complicated as the retail chain’s ready-to-assemble furniture. IKEA operates through two independent groups of companies: IKEA Group, which controls most of the 364 iconic IKEA big-box stores and Inter IKEA Group, which oversees franchise operations. Inter IKEA’s structure includes a Luxembourg holding company, a Luxembourg finance company, a Liechtenstein foundation and a Swiss finance arm. Leaked documents show IKEA’s Luxembourg operations opened the Swiss subsidiary in 2009 to outsource part of their financing operations to yet another low-tax jurisdiction, allowing the company to save taxes both in Luxembourg and in Switzerland. Belgium’s richest family, the billionaire de Spoelberch dynasty, obtained a private tax ruling from Luxembourg in 2008. The de Spoelberch clan, part of the country’s old nobility and close to the royal family, holds a big stake in ABInbev, the world’s biggest brewer whose labels include Budweiser, Stella Artois, Corona and Beck’s. The records indicate the de Spoelberch’s routed €2 billion through Ireland and then Luxembourg, reducing taxes with each step. The only sign of Luxembourg companies controlled by the family appears to be a small letter box at an address that lists nearly 190 other companies. Even the Canadian government got a private Luxembourg tax ruling. In 2008, the Public Sector Pension Investment Board, which manages pensions for all Canadian federal employees, including the Royal Canadian Mounted Police, bought real estate in Berlin. The pension board set up Luxembourg companies that helped it sidestep German land transfer taxes. A complex internal loan structure allowed the board to pay minimal taxes in Luxembourg on income from the German properties. The investment board has a Luxembourg office – a place where desks can be rented by the month and where two employees watch over600 million in European investments.  The Canadian pension board and Inter IKEA both said their tax planning complies with all laws and regulations. The Canadian fund argues that because it has tax-exempt status in Canada, it ultimately gained “no tax advantage” by routing investments through Luxembourg. Inter IKEA said its total effective corporate income tax rate is currently around 14 percent. Pepsi, Coach and an accountant for the de Spoelberch family’s Luxembourg holdings declined to comment on the specifics of their tax arrangements. “This is the first time really that we’ve seen inside the workings of Luxembourg as a tax haven,” said Richard Brooks, a former U.K. tax inspector and author of the book The Great Tax Robbery, who was hired by ICIJ to help review some of the leaked documents. “The countries . . . that are losing money, they don't know about it, don’t know how it operates at all.”  Gilded Age Last month, in the Gilded Age splendor of New York’s private Metropolitan Club, Pierre Gramegna, Luxembourg’s minister of finance, tried to woo the Wall Street crowd with some premier cru wine and a little levity. He told assembled financiers that he wanted to dispel the myth that his tiny country is nothing more than a tax haven: “Luxembourg is not an offshore place. I say it loud and clear.” What he got back was hearty round of laughter. In the wake of the EU’s probe of its tax practices, Luxembourg officials continue to bristle at their nation’s tax haven label. The country, a founding member of the EU, boasts of being a multi-lingual nation in the heart of Europe with a business-friendly and stable government. Once primarily a steel-maker and manufacturer, Luxembourg has transitioned into a financial center rivaling London, New York or Hong Kong. With $3.7 trillion in assets under management by banks and other institutions, Luxembourg is second only to the U.S. as a global investment center. More than 170 of the Fortune 500 companies have a Luxembourg branch, according to Citizens for Tax Justice, a nonprofit research and advocacy group. A total of $95 billion in profits from American corporations’ overseas operations flowed through Luxembourg in 2012, the most current statistics from the U.S. Bureau of Economic Analysis show. On those profits, corporations paid $1.04 billion in taxes to Luxembourg – just 1.1 percent. Other tax havens, Ireland for example, openly advertise rock-bottom corporate tax rates of 12.5 percent. Luxembourg instead maintains a statutory tax rate of 29 percent, but the leaked files show that the duchy has routinely approved tax rulings that whittle down what counts as taxable income to practically nothing. This can drop Luxembourg’s effective tax rate deep into single digits. Less than 30 percent of the tax deals in the leaked documents include a specific figure for the amount of money that companies said they planned to “invest” through the Luxembourg agreements. The total for those deals was roughly $215 billion between 2002 and 2010. The figure would likely grow to several hundred billion dollars if projected investments in other deals in the leaked PwC documents were included. And the overall figure for money shuffled through Luxembourg as the result of confidential tax agreements would grow even larger if tax deals arranged through other accounting firms were included. PwC’s letters seeking special tax rulings were usually 20 to 100 pages long. They detail various financial strategies and then specify the tax treatment the accountants expect to get for their clients – suggesting, for example, that dividends be treated as tax-free interest. The leaked tax rulings indicate that negotiations were conducted in private meetings between PwC accountants and Luxembourg tax officials. PwC’s written proposals were often approved the same day they were submitted. The deals can be so complex that PwC accountants frequently include “before” and “after” diagrams to illustrate how money flows from subsidiary to subsidiary and across different countries and tax havens. The leaked records show that Luxembourg’s 2009 tax deal for Illinois-based Abbott Laboratories – which makes arthritis drugs and Ensure meal replacement shakes – features 79 steps including companies in Cyprus and Gibraltar. Abbott projected it would invest as much as $50 billion via Luxembourg. A spokesperson for Abbott declined comment. In a 2009 presentation, PwC highlights Luxembourg as a place with “flexible and welcoming authorities” who are “easily contactable” and offer a “readiness for dialogue and quick decision-making process.” Most of the leaked tax rulings were approved and signed by the same tax official, Marius Kohl, now retired. Sometimes known in tax circles as “Monsieur Ruling,” Kohl was described by one Belgian newspaper as “the guardian of the only door through which companies can enter the fiscal paradise of Luxembourg.” During his time as head of a Luxembourg agency called Sociétés 6, Kohl oversaw the approval of thousands of tax agreements, personally signing as many as 39 in the course of a single day. The Wall Street Journal has reported that since Kohl retired in 2013, it can take up to six months for a tax ruling to be approved. A woman who answered the phone at Kohl’s home told an ICIJ reporter that he wasn’t interested in talking. In a recent interview with The Wall Street Journal, Kohl said: “The work I did definitely benefited the country, though maybe not in terms of reputation.” When a Journal reporter asked whether the prices that companies’ Luxembourg affiliates charged sister companies outside the country for the use of intellectual property and other services were accurate, Kohl licked his thumb and held it in the air. “There was no way to verify it,” he said. Financial Power Luxembourg’s economy benefits from a growing cadre of lawyers, accountants, and financiers who are hired to appear before the tax authorities. PwC, for example, said in 2013 that it had more than 2,300 employees in Luxembourg and that it expected to add another 600 in 2014. Sprawling office parks of high-rise towers, not unlike those outside of Dallas or in northern Virginia, bustle with energy. Construction cranes dot the skyline. The International Monetary Fund reports that Luxembourg has the planet’s highest economic output per capita – $112,473 per person in 2013, more than double the United States ($53,001), France ($44,099) and the United Kingdom ($39,372). “Luxembourg is not what people think it is when you think of a tax haven,’’ Mackel, CEO of Luxembourg for Finance, said. “We make steel and car components and have a logistics industry. Our financial center is diverse with first class funds, insurance, corporate finance and Europe’s leading stock exchange. Luxembourg is about much more than this one issue they try to make of it.’’ Still, Luxembourg has many ways to cut tax bills not always seen elsewhere. For example, some 80 percent of royalties on earnings from intellectual property – software copyrights, patents and trademarks, for instance – are exempt from taxes. Corporations that have established toeholds in Luxembourg have made use of financial instruments that shift money around the map to play one country’s tax rules against another. This might be, for instance, a hybrid debt instrument that allows profits to move out of a high-tax EU country to a Luxembourg entity. The profits are treated as interest payments in Luxembourg, where they can be deducted from taxes. In the parent company's country, they can be treated as dividends and eligible for a tax exemption. The EU recently banned the use of hybrid loans that exploit tax mismatches between country tax systems for companies headquartered in Europe. Luxembourg and other EU members have until the end of 2015 to enact the ban into law within their own borders. As in many tax havens, a Luxembourg office can be just a mailbox. Office buildings throughout the city are filled with brand-name corporate nameplates and little else. Some have offices and no visible employees. One building at 5 Rue Guillaume Kroll is home to more than 1,600 companies; another at 2 Avenue Charles de Gaulle houses roughly 1,450; and a building at 46A Avenue J.F. Kennedy is home to at least 1,300, according to an ICIJ analysis of Luxembourg’s corporate registry. These companies can represent big bucks. From the U.S. alone, direct investment into Luxembourg in 2013 was $416 billion, according to the U.S. Bureau of Economic Analysis. Of that, the vast majority, $343 billion, was in the form of holding companies, which are vehicles to hold securities and financial assets rather than to create local jobs. In fact, Luxembourg represents a tiny fraction of 1 percent – 0.13 percent in 2010 – of all overseas jobs with American companies, indicating it is a place that houses money more than it provides employment. In 2011 Luxembourg passed new rules requiring that Luxembourg-based companies that serve as internal banks for larger corporate structures station a majority of their managers and board members in the Grand Duchy. It’s unclear how these rules are enforced and the Ministry of Finance did not respond to ICIJ’s questions about mailbox companies in Luxembourg. EU probe Luxembourg’s freewheeling ways are gaining it few friends in nearby Brussels, the EU’s headquarters. The European Commission, the administrative arm of the EU, is investigating whether Luxembourg’s tax rulings for Amazon and Fiat Finance constitute illegal state aid, violating rules that bar EU members from offering deals to one company that are not available to all. “In the current context of tight public budgets, it is particularly important that large multinationals pay their fair share of taxes,” Joaquín Almunia, the commission’s vice president for competition policy until last week, said earlier this year in announcing EU probes into tax practices in Ireland, The Netherlands and Luxembourg. Reuters reported in 2012 that Amazon’s Luxembourg arrangements allowed it to have an average tax rate of 5.3 percent on overseas income from 2007 to 2011. Amazon company filings show that in 2013 the on-line merchant reported revenues of $20 billion from its European operations, which are channeled primarily through Luxembourg. The commission’s Amazon probe focuses on one of the online retailer’s key companies in Luxembourg, Amazon EU S.à.r.l., which handles services to Amazon’s European customers. The commission argues that a generous 2003 tax ruling by Luxembourg authorities allows Amazon EU S.à.r.l. to funnel millions of euros in tax-deductible royalties each year to yet another Amazon company in Luxembourg, a limited partnership that is tax exempted. This tax break and others like it allow Amazon to pay little in taxes in the Grand Duchy on its European sales. The leaked PwC documents show that in 2009 Amazon EU S.à.r.l. reported more than €519 million in royalty expenses while the limited partnership Amazon Europe Holding Technologies SCS had an influx of the same amount “based on agreements with affiliated companies.” Thanks to the royalty expenses and other deductions, Amazon EU S.à.r.l. posted a taxable profit of just €14.8 million and paid €4.1 million in taxes in Luxembourg. Amazon did not respond to ICIJ’s requests for comment. As EU authorities are pushing their corporate tax probes, a leading multinational group, the Organization for Economic Cooperation and Development, has proposed a new set of rules that would bar companies from using many common practices to shift profits into tax havens. Approval of the OECD’s proposals, however, is uncertain and years away. Gramegna, Luxembourg’s finance minister, said in an interview with ICIJ in New York that “the European Commission is entitled, by treaty, to look after fair competition and at state aid. They decided to look into Amazon. We are telling the European Commission that everything we’ve done has been within the general principles of the European Union and the OECD.” Adding a political twist to the Brussels probes is Juncker’s rise to the presidency of the European Commission. As Luxembourg’s prime minister, he signed into law the provision that allows companies to write off 80 percent of royalty income from intellectual property. In a speech in July in Brussels, Juncker promised to “fight tax evasion and tax dumping. … We will try to put some morality, some ethics, into the European tax landscape.” But he also recently told German television: “No one has ever been able to make a convincing and thorough case to me that Luxembourg is a tax haven. Luxembourg employs tax rules that are in full accordance with European law.” At a press conference two weeks ago, Juncker promised he wouldn’t try to influence regulatory cases involving Luxembourg: “I won't abuse my position in order to pressure commissioners to make different decisions regarding Luxembourg than they would regarding similar cases.” Many observers are skeptical Luxembourg and its allies will give up the country’s flexible tax regime without a battle. Jürgen Kentenich, chief tax fraud investigator in the German city of Trier, which lies near the border with Luxembourg, worries that big companies and their accountants will keep finding ways to take advantage of the deals offered by Luxembourg and other financial havens, while smaller companies and average taxpayers are left to make up the what’s lost in tax revenues. “It’s always the same story,” he said in an interview with ICIJ’s partner, the Canadian Broadcasting Corporation. Accounting firms are always coming up with fresh ways to cut tax bills “and lawmakers and tax authorities are always behind, always chasing.” Margot Williams, Edouard Perrin, Emilia Díaz-Struck, Delphine Reuter, Frédéric Zalac, Harvey Cashore, Lars Bové, Kristof Clerix, Julia Stein, Titus Plattner, Mario Stäuble, Minna Knus-Galán, Matthew Caruana-Galizia, Rigoberto Carvajal, Christoph Lütgert and Neil Chenoweth contributed to this story.   

25 октября 2013, 09:58

Сбербанк нашел топ-менеджера в PepsiСo

До конца года в число топ-менеджеров Сбербанка может войти старший вице-президент по интеграции «PepsiCo Восточная Европа» Алексей Мехоношин. По сведениям «Коммерсанта», пока речь идет о том, что он будет отвечать за кадровую политику, но не исключено, что опыт Мехоношина в потребительском секторе банк использует для усиления своих позиций в торговых сетях. В Сбербанке подтвердили информацию о приходе Мехоношина. Это не первое «небанковское» кадровое приобретение Сбербанка. В августе этого года на должность первого зампреда был назначен бывший замглавы Walmart и экс-CEO X5 Retail Group Лев Хасис. Но в отличие от Хасиса, который в 1990-е годы был управляющим директором Самарского филиала АвтоВАЗбанка и работал вице-президентом Альфа-Банка, у Мехоношина банковского опыта нет, отмечает «Коммерсант». В 1992-1998 годах он работал в Procter & Gamble. С 1998-го был вице-президентом по маркетингу Pepsi Bottling Group Russia («PBG Россия») и PBG Europe. В 2006 году Мехоношин стал старшим вице-президентом «PBG Россия» по продажам и маркетингу, с 2007-го - президентом «PepsiCo Юго-Восточная Европа», затем - старшим вице-президентом по интеграции «PepsiCo Восточная Европа» и генеральным менеджером «PepsiCo - Вимм-Билль-Данн». Отсутствие у нового кандидата опыта как в банковской отрасли, так и в HR несет определенные риски для Сбербанка, однако не исключено, что банк решил пойти по пути ТНК-BP, в которой практиковалось привлечение экспертов из сегмента продаж товаров повседневного спроса, отмечают эксперты. 

12 сентября 2013, 21:04

White House leans on industry for water push

The White House is leaning on a number of industry groups for its latest health push. And according to White House visitor logs, a lobbyist for the top beverage industry association has visited the White House to meet with a top nutrition official. First Lady Michelle Obama is launching her new Drink Up initiative at an event Thursday in Watertown, Wisconsin. According to the White House, the American Beverage Association and International Bottled Water Association are both promoting the effort. The two associations are the major lobbying forces inside the Beltway for both the bottled water and beverage association. (Also on POLITICO: Experts: W.H. H2O evidence murky) According to the visitor's logs, one of the American Beverage Association's lobbyists, Susan Neely, visited the White House several times. Neely, president and chief executive of the American Beverage Association, met most recently with executive director of Let's Move! and senior policy advisor for nutrition policy Sam Kass. She's also attending a childhood obesity event with the First Lady in 2010. Neely was quoted Thursday in by the Associated Press saying: "Bottled water provides people with a convenient and popular choice." Names matching other lobbyists for the beverage association and the bottled water association also appear numerous times in the visit logs. The American Beverage Association is a lobbying heavyweight that has spent $680,000 so far in 2013. The bottled water association has spent $60,000 so far in 2013. The association represents hundreds of beverage industry companies -- including giants like Coca-Cola, Pepsi, Nestle and others with major stakes in the bottled water market. The ABA PAC is also a major player in the political giving space. Their PAC spent more than $200,000 in the 2012 cycle and has spent more than $100,000. Top water brands Aquafina, BEVERLY HILLS 9OH2O, DASANI, EVIAN Natural Spring Water, Hint, Voss, WAT-AAH!, and Nestle Waters brands (North America's Arrowhead, Deer Park, Ice Mountain, Nestle Pure Life, Ozarka, Poland Spring, resource and Zephyrhills will all help promote the new campaign. Many of those brands are owned by major American beverage companies. The White House did not immediately return a request for comment.

04 февраля 2013, 17:00

WATCH: Oprah's Super Bowl Commercial

By Sue Zeidler and Liana B. Baker Feb 3 (Reuters) - Chrysler's Jeep ad featuring a patriotic salute to U.S. troops and narration by Oprah Winfrey, an Oreo ad asking viewers to vote cookie or creme, and a scantily clad male Calvin Klein model were among standout commercials during a Super Bowl that suffered a half-hour partial blackout delay on Sunday. Ads by Budweiser and PepsiCo's Doritos were less engaging, according to advertising experts, in the game that is annually the largest showcase for U.S. consumers with more than 100 million viewers. The Baltimore Ravens beat the San Francisco 49ers 34-31 after the 49ers staged a furious comeback following a 34-minute partial blackout of the Superdome in New Orleans. During the blackout, CBS filled the time with recaps by the network's commentators and did not use any of the ads, but the game broadcaster said it would honor its commitments to advertisers who paid an average of $4 million for a 30-second commercial. As a result of the delay, the game ran until 10:45 p.m. on the East Coast. "Hands down, the winner was Chrysler because of American pride," said Jim Joseph, president of North America division for Cohn & Wolfe. "Unlike other carmakers, they didn't talk about their features. Instead they showed what they're doing in partnership with USO to bring home troops to their families." The National Football League's big game started off on a somber note with a rendition of "America the Beautiful" by Jennifer Hudson and the chorus from Sandy Hook Elementary School in Newtown, Conn., where 20 children and six adults were killed in a Dec. 14 shooting. Mayors Against Illegal Guns, including more than 800 mayors led by New York Mayor Mike Bloomberg, ran an ad in the Washington, D.C., area that urged U.S. lawmakers to pass rules requiring background checks on gun buyers. CBS spokespeople did not elaborate on how they would honor commitments from advertisers. Jim Joseph of Cohn & Wolfe said that by "honoring their commitments," CBS guaranteed that the placement of ads would not be affected, with those in the third and fourth quarter appearing where they had been contracted to appear. While the game was being played, advertisers offered the kind of humor-laced ads that have annually been a part of the game. An M&M ad featuring "Glee" star Naya Rivera romancing a red M&M was a crowd pleaser, while an Oreo ad asking viewers to visit the social network Instagram to vote on whether they prefer the cookie or creme of the iconic sandwich cookies was another hit. "That was brilliant marketing and generated thousands of hits on Instagram within minutes," said Joseph. Chrysler's salute to U.S. troops was in keeping with patriotic messages that appear to becoming a hallmark of its ads. Last year, Chrysler's commercial featured a surprise guest appearance by Clint Eastwood who proclaimed it "Halftime in America." Chrysler was one of the holdouts that did not reveal its marketing strategy prior to the game, while many released online teasers and contests to engage viewers ahead of the game. This year many ads stirred controversy, touching off online debates and headlines. One spot by Coca-Cola was denounced as "racist" by Arab-American groups, who received an apology from the soft drink giant. In an online teaser for its longer advertisement, the ad showed a person who appeared to be an Arab falling behind in a race to reach a gigantic Coke bottle, as his camel refused to move, while cowboys, Las Vegas show girls and a motley crew fashioned after the marauders of the apocalyptic "Mad Max" film raced by him. The ad encouraged viewers to vote online on which characters should win the race, but failed to allow a vote for the person on the camel. SodaStream, which makes a home carbonation system, generated hefty publicity for a spot that didn't even make it to the big game. It issued a statement that CBS rejected its original Super Bowl commercial showing bottles of Coke and Pepsi, two of the game's biggest sponsors, combusting spontaneously as they were being delivered to a store as someone used a SodaStream product. Other 30- and 60-second spots stretched the boundaries with scantily clad Kate Upton pushing Mercedes-Benz, while domain name registrar GoDaddy caused a stir with its ad showing a nerdy looking man schmooching with super model Bar Refaeli. But Derek Rucker, professor Kellogg School of Management at Northwestern University, said by the time the ad finally ran during the game, viewers felt "the GoDaddy close-up was too much." Taco Bell scored a hit with its ad featuring a geriatric joyride, with graying consumers enjoying the fast food. "Right now it looks like Taco Bell is going to be the winner tonight with the geriatric commercial and the reworking of the song, 'We Are Young' done in Spanish," said Brent Poer, president of LiquidThread, a division of media agency Mediavest, about the spot showing senior citizens behaving badly and getting tattoos. Another favorite was an Audi commercial about a kid getting to take his dad's car to prom and kissing a girl. "We've all been in high school where you didn't feel like you fit in. It's funny but there's a core human quality they pulled from," said Poer. The Calvin Klein underwear ad got a lot of traction on Twitter. "The response from women was pretty overwhelming. It reminded me of the H&M spot with David Beckham a year or two ago where it was a slow pan of his body," said Claudia Caplan, chief marketing officer at advertising agency RP3, based in Bethesda, Maryland. CBS also expanded its so-called "second-screen" offerings to complement the television broadcast, said Jason Kint, senior vice president and general manager of CBSSports.com, The enhanced features on CBSSports.com include a first-ever live stream of the Pepsi-sponsored halftime show featuring Beyoncé, additional camera angles to see the action from different perspectives and immediate access to the commercials as they are broadcast on CBS. "The moment when an ad runs, it becomes a true Super Bowl commercial and people start talking about it. Now they can immediately watch it again online as they are talking about it," Kint told Reuters. "Any advertisers will consider that as value for the ad. It becomes immediately social and played again and again," he said.

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02 февраля 2013, 20:15

Why It Pays To Be Scandalous

By Lisa Richwine and Sue Zeidler Feb 1 (Reuters) - Provocative commercials for this year's Super Bowl broadcast have scored points before the opening kickoff, with eyeball-fetching teasers nearly as important to advertisers as the longer spots for the actual game. Even the prospect of bad publicity has not tempered the promotions. Coca-Cola and Volkswagen entries generated complaints about racial stereotyping. A teaser for Mercedes-Benz showcasing a supermodel's body has already drawn the ire of some media watchdogs. SodaStream scored a publicity touchdown with an ad that will not even appear during the game. The debates have prompted millions of online views, thousands of social media comments and headlines questioning whether the pitches were offensive - all this before the full audience of 100 million viewers who will watch the San Francisco 49ers play the Baltimore Ravens have seen the ads. That degree of attention can boost the value for ads beyond the $4 million-plus that agencies pay for some of the 30-second spots. Advance buzz gets people talking and, better yet from a marketer's perspective, searching for the promotions online. "It's almost a game around the game," said Ammiel Kamon, executive vice president for Kontera, which tracks online brand and content marketing. He says the strategy has been honed in earlier campaigns. The pre-game scandals have already benefited some companies - including one whose ad was not even accepted. SodaStream, which makes a home carbonation machine, turned its pre-game dustup with CBS into a marketing victory, said Ronald Goodstein, professor at the McDonough School of Business at Georgetown University. SodaStream revealed that CBS rejected a Super Bowl commercial showing bottles of Coke and Pepsi, two of the game's biggest sponsors, combusting spontaneously as they were being delivered to a store at the moment someone used a SodaStream product. The company issued a statement saying the ad was declined "because the two Big Soda brands are clearly identified," setting up the image of a David and Goliath battle, with the little guy fighting soda giants. SodaStream posted the ad on its website and said it will run on other TV networks. "They're getting a lot more out of it than their money's worth," said Goodstein. "If you can create a controversy that enhances the brand to the target audiences, then go for it." The bright lights of controversy don't always flatter the advertisers. Coke generated complaints and a CNN debate by pundits when Arab-American groups sharply criticized its ad as racist. The commercial shows an Arab pulling a camel through the desert as cowboys, Las Vegas show girls and a crowd of marauders like those in "Mad Max" race by to reach a gigantic bottle of Coke. Warren David, president of the American-Arab Anti-Discrimination Committee, complained that U.S. media portrayals of Arabs are too often stereotypical: "Why is it that Arabs are always shown as either oil-rich sheiks, terrorists, or belly dancers?" The soft drink giant called the group on Thursday to apologize and held what it called a "productive conversation" but said it would still show the commercial. The Super Bowl provides TV's largest audience, so advertisers must be at the top of their game. "A certain degree of risk-taking is probably necessary to stand out in the Super Bowl," said Charles R. Taylor, professor of marketing at Villanova School of Business. Mercedes made a pitch for younger viewers by featuring Sports Illustrated swimsuit model Kate Upton in a car-wash teaser, the camera slowly panning her scantily-clad body. The carmaker released the video online, and Upton tweeted it to her 697,000 followers, generating headlines and a rebuke by the Parents Television Council. "We knew it would be polarizing," said Mercedes USA spokeswoman Donna Boland. "If it's not polarizing then people aren't going to talk about it." Volkswagen's spot, featuring a white American man speaking in a Jamaican accent, drew some complaints but won endorsements from national officials, who said it was a celebration of reggae music and the country's hospitable culture. Tim Mahoney, chief marketing officer for Volkswagen of America, said pre-release testing yielded positive reactions from Jamaican viewers and others. Online polls show overwhelmingly people liked the ad, he said. The carmaker didn't expect a controversy, he said, but admitted it "has created more interest. I think that's a good thing." News coverage of the ad should help it stand out among the long passes and crushing tackles, said Claudia Caplan, chief marketing officer of RP3 Agency in Bethesda, Maryland. "In a way, that was the best thing that could have happened," Caplan said. "Otherwise, it would have died with a whimper."

09 января 2013, 04:23

Huh…It Must Be Something in the Water

Daisy Luther, ContributorActivist Post There’s definitely something in the water, and none of it is good. There is so much garbage in our water that you practically need an advanced degree in chemistry to just to figure it out.  It’s not a subject that can be ignored, though, because water is the most vital and life-sustaining substance that we can store. We want to store the most pure, high-quality consumables that we can, in order to maintain our optimum wellness during any type of disaster scenario, and that includes the water we store. Most preppers know the “Survival Rule of Three”:3 minutes without air3 days without water3 weeks without foodBased on that hierarchy, if the SHTF and you’re still breathing, your next focus needs to be on drinking water.  A well-prepared person will have that taken care of this by storing at least a one month supply of water for all members of the household, including pets. The basic rule for water storage is one gallon per day per person (and pet), and more if it is hot weather or you will be doing strenuous physical labor.When I first began prepping, I used to get people to give me their empty 2 liter soda pop bottles. I blithely filled those bottles up with tap water and squirreled them away in my attic.  I had, quite literally, hundreds of 2 liter bottles full of water. I’d washed them carefully, filled them up from my faucet, and added a drop of unscented chlorine bleach, just as all the prepping forums recommended. google_ad_client = "pub-1897954795849722"; /* 468x60, created 6/30/10 */ google_ad_slot = "8230781418"; google_ad_width = 468; google_ad_height = 60; Then I began to learn more about the dangers that were rife in tap water.  I switched to bottled water….then began to learn about contaminants in bottled water.  I was stymied – how do you provide your family with a proper water supply when it all seems to be contaminated?  Moreover, what are you supposed to drink on a day-to-day basis?  I had already cut out all sugary beverages – we drank nothing but water throughout the day.  But was I still poisoning my family?Environmentally Toxic Tap Water The toxins present in municipal water supplies vary from city to city.  In the US Midwest, for example, there are high levels of pesticides (in particular, weed killer) due to agricultural practices that contaminate the groundwater (this also affects well water in the area).  In 22 states with military contractors, percholate, the explosive component of rocket fuel, has been found in the tap water.   In 2008, the AP released a report informing us that water treatment centers were unable to remove all traces of pharmaceutical drugs from the water supply.  (The drugs were introduced into the water by human and animal urine.)To determine the extent of drinking water contamination, an Associated Press investigative team surveyed the water providers of the 50 largest cities in the United States and 52 smaller communities, analyzed federal databases and scientific reports, and interviewed government and corporate officials. The investigation found widespread evidence of drinking water contaminated with both over-the-counter and prescription drugs, including painkillers, hormones, antibiotics, anti-convulsants, anti-depressants, and drugs for cancer or heart disease. Of the 28 major cities that tested their water supplies for pharmaceuticals, only two said those tests showed no pharmaceutical contamination. In Philadelphia, 56 different drugs and drug byproducts were found in treated drinking water, and 63 were found in the city’s watershed. SourceAlso found in tap water are contaminants like aluminum, arsenic and lead (more on lead below).Chemical Cocktails – It’s All for Your Own Good If the outside contaminants aren’t enough of a worry, how about the chemicals that are deliberately added to the water supply by the treatment facilities themselves?First of all, in North America, tap water is chlorinated.  This removes disease-causing bacteria, which is great, but it also creates numerous toxic byproducts, like chloroform and trihalomethanes. According to Dr. Michael J. Plewa, a genetic toxicology expert at the University of Illinois, chlorinated water is carcinogenic.Individuals who consume chlorinated drinking water have an elevated risk of cancer of the bladder, stomach, pancreas, kidney and rectum as well as Hodgkin’s and non-Hodgkin’s lymphoma.Some facilities are also adding ammonia to the chlorinated water, which creates “chloraminated” water. Anyone who has ever cleaned a house knows that mixing bleach (chlorine) and ammonia is a no-no – so why are the facilities doing so?  Apparently it reduces the carcinogenic byproducts created by adding chlorine – which must be done to meet EPA standards.  Unfortunately, it creates a brand new variety of toxins.  Fish and reptiles die when subjected to chloraminated water, and the effects on humans are just now being studied.To make matters worse, chloraminated water reacts with the lead in water pipes, releasing yet another toxin into the public water system.  In Washington DC, when chloramination of the water first began, lead levels were found to be 4,800 times the UN’s acceptable level for the toxic heavy metal! No discussion on water would be complete without a dishonorable mention for the inclusion of fluoride any many municipalities.  The fluoride added to the water supply is sodium fluoride, and is also sold as pesticide, bearing the warning “deadly to humans”. While the talking heads of media and government are telling consumers that the fluoride in drinking water will assure them of good dental health, people are actually being poisoned.  The consumption of fluoride lowers IQs, causes infertility, has been linked to cancer and causes hardening of the arteries.  In fact, one study “published in the January edition of the journal Nuclear Medicine Communications, the research highlights the fact that mass fluoride exposure may be to blame for the cardiovascular disease epidemic that takes more lives each year than cancer. In 2008, cardiovascular killed 17 million people. According to the authors of the study:The coronary fluoride uptake value in patients with cardiovascular events was significantly higher than in patients without cardiovascular events. (Source)It’s also important to note that the inclusion of fluoride in drinking water has no discernible positive effect on dental health. In fact, it can cause dental fluorosis,  a visible overexposure to fluoride resulting in  subtle white flecks in the tooth enamel all the way to a pronounced brown staining,. “Health Ranger” Mike Adams blows the lid off fluoride in this 9 minute video.Bottled Isn’t Better To add to the frustration, most bottled water is not that much safer than tap water.  In fact, the Environmental Working Group (EWG) found 38 contaminants in the top 10 brands of bottled water sold in the United States.  The contaminants included disinfection byproducts, fertilizer residue, and pain medication, to name a few. Two brands, Walmart and Giant, were chemically identical to tap water, but sold at approximately 1900 times the price of the water from your faucet. In fact, according to some reports, more than 40% of bottled waters on the market are nothing more than tap water (including Pepsi’s Aquafina).In a report, the Environmental Protection Agency warns consumers that you just don’t know what you are getting with bottled water.Some bottled water is treated more than tap water, while some is treated less or not treated at all. Bottled water costs much more than tap water on a per gallon basis… Consumers who choose to purchase bottled water should carefully read its label to understand what they are buying, whether it is a better taste, or a certain method of treatment.Another issue with bottled water is that chemicals leach into the water from the bottle it is contained in.   Chemicals like BPA and phthalates mimic hormones in your body, causing symptoms like brain damage, early puberty, prostrate problems, decreased sperm counts, decreased immune functions, obesity and learning issues.What Can You Do? With all of the bad news about the water supply, you’re probably feeling as frustrated as I was.  The good news is, there are actions you can take to ensure the best possible supply of water in our  increasingly contaminated world.Get spring water right from the source.Absolutely the best option for drinking water is finding a spring nearby and filling your own bottles with it.  There is probably a spring nearby with water free for the taking.  Use this interactive map to find a spring close to you. (Unfortunately, not all countries are represented on this map, but the US and many European countries are.) Spring water is naturally filtered by the earth, leaving a clear delicious water loaded with healthy minerals. Even better, in many places, spring water is free – just bring your containers and fill them up!Filter your water. Get a good, gravity-fed water filter.  This will allow you to remove many of the toxins found in tap water or surface water.  I have the Big Berkey and have been very pleased with it.  If your municipality adds fluoride to the water, it is necessary to also purchase a specific filter to remove the fluoride. A gravity fed filter does not require power to work, making it an excellent choice post-disaster. Choose your containers carefully. Glass is the most healthful option for water storage; however, large glass containers full of water are heavy and can break.   If you are using plastic containers, the safest ones are marked Polyethylene terephthalate (PET or PETE) or High density polyethylene (HDPE).  Plastic containers that formerly contained juice or water are already compromised from the enzymes in those liquids. Water stored in plastic bottles should not be exposed to extremes of temperature, as this can also cause the plastic to leach chemicals into the water.Reverse Osmosis and distillation alone are not enough. The purification processes of Reverse Osmosis and distillation do not remove do not remove bacteria, viruses, or certain chemicals.  These processes, while good, should be followed by filtration. google_ad_client = "ca-pub-1897954795849722"; /* 468x60, created 7/28/12 */ google_ad_slot = "9833874419"; google_ad_width = 468; google_ad_height = 60; Water stored or purified with bleach should be filtered. If you store your water with a couple of drops of bleach in it, you should put it through your water filter if possible.  I no longer store my water with bleach because I use my stored water on a rotating basis.  We only drink spring water, and the 5 gallon jugs are used within 6 weeks.Daisy Luther is a freelance writer and editor. Her website, The Organic Prepper, where this article first appeared, offers information on healthy prepping, including premium nutritional choices, general wellness and non-tech solutions. 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14 октября 2012, 04:17

WORLD: Afghanistan's Pepsi Bottle Boys

A group of boys have taken up traffic duty on Mahi Par pass, a dangerous, highly trafficked road outside of Kabul, using only old soda bottles and determination to make money.