PricewaterhouseCoopers (PwC) has been taken to task for promoting tax avoidance in Luxembourg on an “industrial scale” in a report by the Public Accounts Committee (PAC), chaired by Margaret Hodge MP.
The list of over 300 companies listed for engaging in tax avoidance was uncovered by the International Consortium of Investigative Journalistsin November and prompted a PAC evidence session in December.
The Big Four accountancy firm said in response: "We stand by the evidence we gave the Public Accounts Committee and disagree with its conclusions about the work we do. But we recognise we need to do more to explain the positive role we play in the tax system and in helping businesses to operate successfully. “
Richard Murphy, founder of the Tax Justice Network and director of Tax Research has his own views on why certain businesses choose to domicile in Luxembourg. “The reason why funds are in Luxembourg, is that like most small jurisdictions, it has no competitive advantage in the market place bar one thing. It’s ability to sell its right to legislate. The only thing it has going for it is that it can make law.
Luxembourg has been captured by the financial services industry which is now effectively running the place to its own advantage.” he says.
He does feel that it is unfair that PwC has been singled out, the only reason it has been was because a former employee Antoine Deltour released the documents regarding tax avoidance schemes. He now faces criminal charges and up to 10 years in prison although he claims he was motivated by his conscience.
Murphy finds it “staggering” that Deltour is being charged with theft and says PwC risk “making a martyr” out of him. Despite the damning report, PwC has not been accused of breaking any laws and Murphy says he would be surprised if the other Big Four accountancy firms had not been involved in similar schemes.
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