Another bad day for McDonald’s, a good day for tax justice
Federal prosecutor in Brazil launches a criminal investigation into multinational's tax affairs, whilst European Parliament confirms the company will appear again in from of special tax committee.
In the marathon struggle to get multinationals to pay their fair share, good news can sometimes seem few and far between. You wait forever and then two come at once.
A federal prosecutor in Brazil has opened a criminal investigation into McDonald’s tax affairs in the country. McDonald’s and its master franchisor in Latin America, Arcos Dorados, are accused of using inflated royalty payments to avoid tax. It is a structure strikingly similar to McDonald’s tax arrangements in Europe, exposed in the Unhappy Meal report. Moreover, Arcos Dorados is also facing charges related to alleged bribes paid to government officials in return for favourable tax treatment.
The investigation follows on from a petition filed by Brazilian trade unions last summer that denounced the multinational for tax avoidance, unfair treatment of franchisees and dodgy real-estate practices.
Closer to home, McDonald’s has confirmed that it will attend the hearing of the European Parliament’s Special Tax Committee scheduled for 15 March. The multinational already testified in front of MEPs in November, but failed to give any solid answers on its tax affairs. We can but hope that their agreement to come back to the committee marks a change of heart and that they’ll be more cooperative this time round.
However, if McDonald’s again dodges questions and refuses to respond to the mounting evidence against them, they will only tarnish their public image further.
For the world’s second-largest private employer it looks like the McChickens are finally coming home to roost. If the company wants to improve its fast-deteriorating public image, it needs to start paying its taxes and paying its workers a decent wage.