Walt Disney Co. and Microsoft Corp.'s Skype unit are amonghundreds of companies that benefited from lower taxes through“secret” deals with Luxembourg, according to a new report by agroup of investigative journalists.

Confidential documents released by the group show that HongKong-based Hutchison Whampoa Ltd. and private equity firm WarburgPincus LLC also are among the international companies that havebenefited from arrangements in the country allowing them to cuttheir tax bills. The International Consortium of InvestigativeJournalists posted the documents on its website late Tuesday.

More than 340 companies have transferred profits to Luxembourgusing complicated tax arrangements, the group of more than 80journalists said in a report on Nov. 5, which reviewed almost28,000 documents and identified companies such as PepsiCo Inc.,Ikea Group and FedEx Corp. Some corporations effectively loweredtheir tax bill to less than 1 percent of profit, the groupsaid.

The latest disclosures give details of the tax deals for 35companies that were arranged by accounting firmsPricewaterhouseCoopers LLP, Deloitte LLP, KPMG and Ernst &Young. The four firms declined to answer questions regarding thetax agreements and cited their global codes of conduct requiringtheir employees to comply with the law and behave ethically, theICIJ said.

“Luxembourg agrees that the legitimacy of certain mechanisms,which are compliant with international and national law, can be putin doubt from an ethical point of view,” Luxembourg's FinanceMinistry said today. Non-double-taxation agreements and theinteraction of different countries' tax systems “can lead to asignificant reduction of a company's tax burden, or even notaxation at all,” it said.

This needs to be seen from a “broad perspective, and cannot belimited to one country's regulatory framework,” the ministry saidin a statement.

Without commenting on individual cases, the ministry rejectedclaims that tax rulings by the country are secret. “They areunilateral decisions by the tax authority. They are not, and neverhave been, secret,” it said.

EU Probe

Luxembourg, with a population of about 500,000, is amongcountries being investigated by the European Commission for taxdeals that may have violated the 28-nation bloc's state-aid rules.Firms in the EU probe named so far include Amazon.com Inc. and FiatFinance & Trade in Luxembourg, Starbucks Corp. in theNetherlands and Apple Inc. in Ireland.

Bombardier Inc. is among the companies that had documents onLuxembourg tax rulings revealed yesterday by Belgian newspaper LeSoir, which worked with the ICIJ.

“Bombardier's global corporate structure is in line with therelevant laws, including fiscal laws,” said Isabelle Rondeau, aspokeswoman for the Montreal-based company.

“Disney and Koch Industries, a U.S.-based energy and chemicalconglomerate, both created tangles of interlocking corporations inLuxembourg that may have helped them slash the taxes they pay inthe U.S. and Europe, according to the documents,” the ICIJ said onits website.

Zenia Mucha, a Disney spokeswoman in the U.S., called the report“deliberately misleading,” saying Disney's global tax rate hasaveraged 34 percent over the last 5 years. “The ruling has notmeaningfully affected the taxes we pay in any jurisdictionglobally,” Mucha said in an e-mailed statement.

Rob Tappan, director of External Relations for Koch CompaniesPublic Sector, said “all Koch companies” pay “taxes in accordancewith applicable laws,” according to ICIJ. The company declined torespond to detailed questions about its Luxembourg operations, thegroup said.

“One of the Skype files relates to a restructuring in whichInternet mega-marketer eBay sold a controlling stake in Skype toprivate investors,” the ICIJ said. The group cited a Microsofte-mail in which the company said it “adheres carefully to the lawsand regulations of every country in which we operate.”

Jean-Claude Juncker, who was Luxembourg's prime minister foralmost 19 years until late 2013, said last month that he had noinvolvement in the deals during his time as finance minister orpremier of the nation. Juncker took over as president of theEuropean Commission in Brussels on Nov. 1.

Bloomberg News

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.