Jean-Claude Juncker, the new president of the European Commission and prime minister of Luxembourg, is being called out for creating a "magical fairyland" for tax-evading companies.
Luxembourg has one-seventieth the population of the city of London, but in the past 20 years, it has become a tax center for about 340 major worldwide companies, with investment funds worth $3.7 trillion in net assets, according to Bloomberg View.
According to the International Consortium of Investigative Journalists, companies funnel their profits from their high-tax country of origin to the low-tax Luxembourg and end up paying only 1 percent of tax on their profits.
Companies include Pepsi, Accenture, Abbott Laboratories, American International Group (AIG), Amazon, Blackstone, the Canadian pension board, Deutsche Bank, the Coach handbag empire, H.J. Heinz, JP Morgan Chase, Burberry, Procter & Gamble, the Carlyle Group, Abu Dhabi Investment Authority, IKEA and FedEx, according to leaked documents cited by the International Consortium of Investigative Journalists.
PricewaterhouseCoopers reportedly brokered the deals between powerhouse companies and Luxumbourg.
The ICIJ claims this discovery is due to 28,000 pages of confidential documents and a team of more than 80 journalists from 26 countries.
"A Luxembourg structure is a way of stripping income from whatever country it comes from,'' said Stephen E. Shay, a professor of international taxation at Harvard Law School and a former tax official in the U.S. Treasury Department, according to Liberty Blitzkrieg.
"Partly as a result of the Swiss-style bank secrecy rules and government-blessed tax avoidance schemes that helped draw so much capital, the people of Luxembourg have become the world's richest after Qatar," according to Bloomberg View.
The ICIJ plans to release some of the leaked documents on Monday.
