Ikea has been known for its multi-national stores world wide. Recently, the company is now known to have evaded taxes worth $1.1 billion, calling it a "large scale tax avoidance".
The company has been accused of evading $1.1 Billion in taxes from 2009 until 2014. The Green Party in the European Parliament has posted a report explaining that the company deliberately shifted money among its stores in Europe via a subsidiary in Netherlands. Ultimately, it ended up untaxed in Lichtenstein or Luxembourg. It was found that in 2014, about $39 million were missing tax revenues in Germany. The same goes in France, for $26 million and $13 million in the UK.
Ikea has already spoken against the accusation. The company has recently released a statement in response to the allegations. "We pay our taxes in full compliance with national and international tax rules and regulations," the company explained as their defense against the complaint.
They call it "profit shifting". Profit shifting is recently found to be a common practice for multinational companies operating in EU. They station first in low tax based countries and then funnel their profits through these places. Countries that are low tax include Ireland and Luxembourg.
The European Commission has already promised it would study the report as the regulating group is keen on cracking down on cases like these and closing any or all tax loopholes that enables corporate tax avoidance.
Ikea stands firm by its recent statement and financial analysts and market investors can do nothing but wait for the European Commission to report its findings on the loophole the company was allegedly exploiting.
If found to be true, Ikea may not only face legal and government sanctions but may also likely face losses in consumer and investor confidence.
