AB InBev caught up in illegal tax break

At least 35 multinational companies, including brewer AB InBev, are being ordered to pay a total of €700 million (£525m)after benefitting from an illegal tax break in Belgium.

Margrethe Vestager, EU commissioner for competition (Photo: Wiki)

An EU Commission ruling has found that a government tax scheme offered under the ‘Only in Belgium’ initiative amounted to unlawful state aid being given to large companies, including the Belgium-based multinational brewer.

Margrethe Vestager, EU commissioner for competition, said the scheme allowed companies to count recorded profit as “excess profit”, resulting in “substantially less tax” being paid.

A tax saving of up to 90% was enjoyed by some multinationals thanks to the 10-year scheme, which was in place until February last year.

“National tax authorities cannot give any company, however large or powerful, an unfair competitive advantage compared to others,” Vestager said. “This means that national tax authorities cannot establish tax schemes that only benefit a select group of companies, in this case, multinationals.

“Such schemes put smaller competitors at an unfair disadvantage. They are active in the same markets and have to pay their taxes fair and square, according to normal tax laws.”

While no companies were explicitly named in the EU Commission ruling, reports in Belgium and the UK have quoted sources naming AB InBev as one of the beneficiaries of the illegal scheme.

The brewer reportedly transferred around €140 million (£105m) out of its taxable accounts and into a non-taxable holding company under an “excess profit” ruling awarded by the initiative.

While the drinks business has asked the brewer to comment, an AB InBev spokesperson has been quoted in The Times saying they are “disappointed” by the ruling.

Johan Van Overtveldt, Belgium’s finance minister, hinted that the government may appeal the EU order, saying, “We do not exclude any option”.

“If Europe was to order the recovery of this amount, the consequences for the companies concerned would be very significant and reimbursement itself would be particularly complex,” he said.