News
Telecom says it has done nothing wrong
admin
January 21st, 2015
Share
This article is more than 10 years old.
Billions in earnings, nearly nothing to the taxman, but the company says it is within the law
The telecommunications company 3 has over a million customers in Denmark and has earned nearly 1.5 billion kroner over the past five years.
And yet, the telecoms company has paid hardly any Danish taxes. Like many mobile operators, its main offices are based in a tax haven – in this case Luxembourg.
The Danish company is owned by the Hong Kong company Hutchison Whampoa of which Hong Kong’s richest man, Li Ka-shing, is the principal owner.
Big profits, small tax bill
A perfectly legal tax haven like Luxembourg allows billions in revenue from places like Austria, Italy, Ireland, Sweden and Denmark to pour out of the EU, which means only a 1/64 of a percent is paid in taxes before the money lands in Hong Kong.
The Luxembourg company that owns 3 in Denmark showed profits of 2.1 billion kroner in 2013, and most of that income was not taxed.
For its part, 3 said in a statement that major investments in infrastructure and marketing have created losses that have reduced taxable income.
“Our massive investment created a loss in the first year,” the company said. “The accumulated loss has offset profits in recent years, reducing taxable income considerably.”
Massive investment
Since launching in Denmark in 2003, 3 has made investments of nearly 5 billion kroner in infrastructure – mostly in the form of nationwide 3G and 4G networks.
The company also invested heavily in marketing, personnel and shops.
READ MORE: One (high-speed) network to unite us all
A leak at the accounting firm PwC Luxembourg revealed hundreds of special agreements with firms across the EU.
PwC and 3 have declined to comment on their arrangements in Luxembourg, but 3 said that a tax audit done in 2010 raised no red flags with reviewers or calls to change their practices.
Share
