According to an expose by the Sydney Morning Herald, Mcdonalds Australia evaded Australian taxes of S$194.7 million (note AUD$1 to S$1) to S$78 million by routing their income to Singapore through a “service fee” of hundreds of millions of dollars. Over a five-year period, Macdonalds Australia evaded half a billion of tax dollars by shifting their profits to Singapore, a notorious tax haven.
A coalition of global trade unions analysed Mcdonald’s finances and found the tax loopholes:
“”McDonald’s uses royalty payments from franchisees and foreign subsidiaries in major markets to route profits to tax havens. These strategies may have allowed it to avoid up to $US1.8 billion in tax in those markets in the years between 2009 and 2013, including €1 billion across Europe and $A497 million in Australia.
…These payments may shift profits out of Australia to a subsidiary in Singapore, thereby reducing McDonald’s tax bill significantly.”
Many multi-national companies have done similar domestic income routing to avoid paying taxes in their home country. In the latest 2015 Financial Secrecy Index [Link], Singapore ranks 4th in the world for lacking in transparency and the scale of their offshore financial activities.
You may view the original Sydney Morning Herald article here.