According to a report by the Guardian, British American Tobacco is being accused of attempting to evade over $700 million in taxes combined from Bangladesh, Indonesia, Kenya, Guyana, Brazil, Trinidad, and Tobago using a UK-based subsidiary to maneuver their profits.
British American Tobacco (BAT), based in London, is the largest tobacco company in the world. The Tax Justice Network reported that in 2016 alone BAT moved over $940 million in profit generated from overseas companies to BAT Holdings, the company’s UK subsidiary. Why? With BAT’s subsidiary based out of the UK, the company can enjoy a 19% tax fee which is significantly lower than in other countries. While this does not eliminate their taxes, it significantly reduces them.
Due to lenient tax laws, it appears that no illegal activity has occurred. However, in the report by the Tax Justice Network, it was quickly noted that BAT has been utilizing complex profit maneuvering to pull off its reduced tax fees. In total, the company appears to have over 100 offshore subsidiaries located in 19 known tax havens. The company’s finances also reveal a multitude of vague “operating charges”, interest fees, and royalties. In over 60-pages, the report by Tax Justice Network also noted additional mysterious transactions including IT charges, advisory fees, and technical fees.