Friday, April 22, 2011

Tax Cheating IKEA

 Tax Cheating IKEA..A Charitable Organization of One...

Nominated for the Public Eye Global Award 2007
by SOMO (Stichting Onderzoek Multinationale Ondernemingen), Netherlands
IKEA Group
Headquarters: Leiden, Netherlands
Branch of trade: Furniture and Furnishing
Turnover / Profit: € 17.3 billion / € 553 million (2005)
CEO: Anders Dahlvig
Owned by: Stichting Ingka Foundation (Ingka Holding B.V.)
Employees: 104,000 in 44 countries (2006)
We’ve all heard of Ikea. But what exactly is it? A Swedish corporation? No, it is actually a tangled
network of companies, holdings and foundations, owned by a Dutch foundation. The Stichting
Ingka Foundation (SIF), formed in 1982 by Ikea founder Ingvar Kamprad, owns the Ingka Holding
Group, which operates 210 of the 240 Ikea furniture stores worldwide. According to “The
Economist” magazine, SIF has a current value of US $36 billion and is therefore the richest
foundation in the world.
But instead of promoting, for example, U.N. programs, this foundation helps Kamprad avoid taxes:
As an official nonprofit organization, SIF does not pay taxes in the Netherlands. Ikea also uses all
legal means to minimize its taxes. And yet the payment of taxes is recognized as a central element
of social corporate responsibility.
Irresponsible corporate behaviour
According to “Spiegel Online”, Ingvar Kamprad is the richest man in the world. Due to the rise of
the euro against the dollar, he dislodged Bill Gates from the top spot in 2006. Both Ikea and
Kamprad dispute not only that he is the richest man, but also that he is still the owner of Ikea.
Nevertheless, Kamprad’s assets amount to US $28 billion as estimated by “Forbes” magazine, and
according to “Bilanz” magazine, he is by far the richest resident of Switzerland.
Although Kamprad officially transferred ownership of Ikea to the Stichting Ingka Foundation in 1982
and now remains only “Senior Advisor”, he still controls SIF via the five-person foundation board,
on which Kamprad’s wife and his Swiss attorney also sit. Officially, the SIF’s billions are intended
for “innovations in architecture and interior design”. But this nonprofit mission statement is simply
fraudulent labeling; the foundation serves primarily for legal and systematic tax avoidance. In
actual fact, SIF makes only minimal disbursements. As far as can be determined, US $1.7 million
was paid out in 2005, to the Institute of Technology in Lund, where architecture is taught.
Submission deadline for nominations: 20 September 2006. Subsequent developments were considered as known.
The problem for the Kamprad family is that it cannot simply withdraw funds from the foundation. An
organizational structure, far more complicated than the trickiest “Billy” bookcase, solves the
problem: The Dutch firm Inter Ikea Systems (IIS) owns the rights to Ikea’s concepts, product
designs and the Ikea brand. As franchiser it receives 3% of global sales from all Ikea shops (€ 631
million in 2004). Who exactly owns IIS is not known; it belongs to a certain Inter Ikea Holding,
registered in Luxembourg, which itself owns a corporation of the same name based in the
Netherlands Antilles, which for its part is run through a “trust company” in Curaçao. Such
organizational structures, that combine various legal forms with multiple tax havens - some with
bad reputations - are hallmarks of dubious structures rather than of a family-friendly corporation.
“The Economist” ventures that Inter Ikea Holding is “almost certainly” controlled by the Kamprad
With profits of € 553 million in 2004, Inter Ikea Holding, together with another Luxembourg Holding,
paid a total of only €19 million in taxes. Kamprad has lived in canton Vaud for years, where he
benefits from lump-sum taxation, offered by Switzerland to a few thousand foreigners. The richest
man in the world pays 200,000 Swiss francs in taxes annually. Nothing is impossible with this
“Swedish” furniture store.
Ikea is an extreme example of the growing practice of corporate tax evasion, resulting in important
public service and infrastructure projects that go unfunded. But even global corporations benefit
from state-financed services: Without qualified employees, public transportation and safety (for Mr.
Kamprad, for example), even a furniture store capable of the impossible cannot function.
Current status and demands
SOMO demands that corporate structures and transactions must not have tax evasion as their
primary objective. Ikea’s tangled network is unlawful and should be dismantled. Furthermore, a
responsible corporation states clearly who profits and where those profits are realized and taxed.
Ikea lacks transparency and publishes virtually no figures, except of course for the prices in the
Ikea catalogue.

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