Drugstore giant Alliance Boots slammed over tax
Alliance Boots, one of Europe's leading drugstore chains, has been accused of avoiding a tax bill of over £1 billion ($1.6 billion) since going private six years ago, becoming the latest multinational to come under fire for its tax affairs.
Anti-poverty charity War on Want, British union Unite and the Change 2 Win federation of U.S. trade unions said the company, which owns pharmacy chain Boots in the U.K., had avoided "at least" £1.12 billion tax since 2008.
Corporate tax avoidance has become a hot topic across Europe following revelations last year that global companies including Starbucks, Google, Apple and Amazon paid little, despite racking up millions in sales.
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The British government pledged to crack down on tax avoidance following public outrage at the lack of corporate contributions to the Treasury amid the implementation of wide-spread austerity measures.
In a report entitled "Alliance Boots and The Tax Gap," published on Monday, War on Want, Unite and Change 2 Win claimed the pharmacy chain took on debts, shifted profit and undertook corporate restructuring to avoid paying tax.
Alliance Boots was delisted from the London Stock Exchange in 2007 following a private equity buyout by U.S. firm Kohlberg Kravis Roberts and the company's deputy chairman, Stefano Pessina.
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This was financed largely by £9 billion worth of borrowings, according to the campaign groups' report - more than 12 times the company's earnings before interest, tax, depreciation & amortization.
The report claimed Alliance Boots apportioned this liability to reduce its U.K. taxable income by around £4.2 billion – compared to what it would have paid if it had not carried any debt – resulting in a tax bill reduced by between £1.12-1.28 billion. The company is not accused of doing anything illegal.
In a statement, Alliance Boots – which has a presence in more than 25 countries and employs over 100,000 people - said the report "may contain significant inaccuracies."
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"We, together with our associates and joint ventures, currently have a presence in more than 25 countries and fully comply with local tax legislation in each country where we operate, including the U.K.," it said. The company added that it conducts its business and organizes its tax affairs strictly in compliance with all applicable law.
Alliance Boots was formed in 2006 from a merger of drug distributor Alliance Unichem and retail chain Boots Group. Last year, U.S. drugstore chain Walgreen Co bought a 45 percent stake in the company.