The multinational brewer is under fire – alongside food and beverage peers United Biscuits and Igloo Foods – since Corporate Watch alleges that it takes high-interest loans from its owners via the Channel Islands Stock Exchange then sends the interest out of the UK tax free, thanks to the so-called ‘Eurobond exemption’.
Molson Coors’ major UK brands include Carling, Coors Light, Cobra and Staropramen.
Sarah Kwei, spokeswoman for grassroots movement UK Uncut, which opposes government spending cuts, said in a statement: “The British public will be justifiably outraged when they hear about this further evidence of tax avoidance by high street stores and manufacturers.”
Perfectly legal tax loophole
“They want to know that the places they shop in and the products they buy aren’t run and made by greedy tax dodgers,” Kwei added. However, it must be said that Molson Coors is using a perfectly legal tax loophole.
Corporate Watch, a not-for-profit journalism, research and publishing group, said that Molson Coors had avoided paying up to £67m by lending its British business £535m, instead of investing the money as equity.
It alleges that profits made on brands such as Carling – the UK’s No.1 lager – are then cut by interest payments made on the loan, where a percentage would usually go to HMRC, thus reducing tax savings from the scheme.
But since loans were made through the Channel Islands Stock Exchange they qualifies for the Eurobond exemption – introduced in 1984 to encourage third-party investment in the UK – and can leave the UK tax free.
‘We pay our fair share’ – Molson Coors
The Independent newspaper is reporting on 30+ companies that it claims load up on owner debt then use the exemption to send interest overseas tax free; the paper estimates the taxpayer cost as at least £500m/year.
HMRC said it did not comment on individual tax cases but said it challenges and closes loopholes, and neither does it condone their use.
A Molson Coors spokesperson told BeverageDaily.com today that it complies fully with the tax codes of every market it operates in, and insists its UK tax affairs have been “reviewed and approved by HMRC, and are deemed to be fully compliant with UK tax rules”.
The company said it pays around £850m in excise, VAT and payroll taxes yearly, and paid out over half of its annual UK turnover in taxes in 2012 alone.
Molson Coors also emphasized its significant contribution to the UK economy, since it employs 2,300 staff, invests continually in its breweries and brands and also funds a major UK pension scheme.