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"It's very hard to compete with a company that doesn't pay any taxes" - Supermac's chief

Supermac’s thinks McDonald’s have skipped paying an enormous €3.7 billion worth of tax in Europe, and they’re not one bit impressed.

Image: Flickr/paul-ford

Updated 2.10pm

SUPERMAC’S HAVE ESCALATED their brand row with McDonald’s by attending the meeting of a European committee to complain in person about what they see as tax avoidance on a grand scale by the American chain.

The European Parliament’s TAXE Committee was set up in February of this year to investigate the individual tax regimes of the EU’s member states.

Supermac’s’ presence at the meeting was inspired by the ‘Unhappy Meal’ report published in February which delved into the complex corporate tax regime in Europe.

Unhappy Meal basically states that McDonald’s had moved its headquarters to Switzerland and then channelled earnings through a Luxembourg-based subsidiary.

By charging subsidiaries for brand licensing rights it’s alleged that profits were in effect cut, leading to lower tax obligations.

The report further states that that McDonald’s have thereby managed to in effect skip €3.7 billion in taxes, only paying €16 million within the EU during the period 2009 – 2013.

Managing director of Supermac’s, Pat McDonagh says the scale of McDonald’s avoidance is “appalling”.

mcdon Pat McDonagh Source: Supermac's

“It’s very hard to compete with a company that doesn’t pay any taxes, much less an enormous multinational like McDonald’s,” he told TheJournal.ie.

There was strong annoyance at the meeting from MEPs that what amounted to a golden circle existed, and was allowed to exist.
They’re canny politicians too obviously (EC president Jean-Claude Juncker, who attended the meeting, was prime minister of Luxembourg during the period of alleged tax evasion), but still I feel there’s a will for change. I was especially happy that the competition commissioner (Margrethe Vestager) was in attendance.
I do hope they get to the bottom of this, because it’s the taxpayer and the small business that pays the price. Think what €3.7 billion could have done even with regard to the banking crisis. It’s an enormous sum.

The alleged situation would have affected some member states more than most, with McDonald’s bigger markets such as France, Spain and the UK being especially affected.

McDonald’s did not appear at the TAXE committee hearing, something they indicated they would do last June at the Harmonisation, a decision that was referred to as “scandalous” by German MEP Burkhard Balz.

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TheJournal.ie has requested comment from McDonald’s Ireland.

In February, with the publication of the report, McDonald’s defended their position in a statement to the International Business Times.

“”McDonald’s complies with applicable laws, including payments of the taxes that are owed in each country in which we operate,” Becca Hary, Director of global media relations at the chain said in that statement.

In addition to paying taxes on profits, we pay significant taxes for employee social contributions, property taxes on real estate, and other taxes as required by law.

The two burger vendors have been at each other’s throats for some time now, not least because McDonald’s have tried to force a ban on the Supermac’s brand in Australia where the chain had sought to expand in order to capitalise on the giant Irish expat population there.

That particular row is set to drag on for at least another two months after the European Commission granted McDonald’s an extension regarding their response to Supermac’s staunch defence of its position.

Originally published 9.18 am

Read: Burger Wars – McDonald’s have now officially objected to Supermac’s Australian project

Read: Confirmed: Supermac’s use different burger sauces in Dublin and Galway

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