- Vivian Hendriksz |
London - US fashion retailer Gap is currently under fire for reportedly enforcing a number of financially planned steps to diminish its tax bill in the UK.
According to Evening Standard, Gap has paid nearly no corporation tax, once rebates have been taken into account, since 2011 in spite of generating sales of over 1 billion pounds. An analysis of its "opaque" accounts found that the three-UK registered Gap companies made net losses between 2012 and 2015, which allowed retailers to reclaim over 4.3 million pounds in taxes and set it against future profits.
The accounts imply that Gap has been shifting profits between these UK companies and its parent company in San Francisco, UK. Although this strategy is legal, it has reduced its possible liability to HM Revenue and Customs. "Gap Inc. is committed to operating according to and complying with all multinational tax laws," said the US company in response to the allegations. "We maintain an open and transparent dialogue with regulators in jurisdictions where we operate."
"We are a taxpayer in good standing in the UK, and have transfer pricing agreements with tax authorities in the UK and the US covering business activities between our entities. Our global effective tax rate has averaged approximately 39 percent over the past decade, and we have paid almost 7 billion US dollars in taxes during this time."
Gap's main UK operating business is named GPS (Great Britain Ltd.), which pays an annual multi-million pound "royalty fee" to a company with its "statutory seat" in Amsterdam, the Netherlands, with offices in London known as Gap (Netherlands). This arrangement had the effect of wiping out any profits in the UK, which means that the GPS does not have to pay any corporation tax. "Multinational companies must pay the tax that is due and we do not accept less," said HMRC.
Photos: Gap, Facebook