Huhtamaki’s Global Tax Planning

When it comes to corporate tax avoidance, there are typically two main strategies: relocating the entire company to a tax haven or shifting part of the profits to a tax haven. This article, however, showcases a rare third approach: artificially creating deductible expenses to reduce taxable profits. Generally speaking, this method is often illegal—such as using fake invoices to inflate expenses. What makes this case remarkable is that the entire scheme was legally compliant, explicitly endorsed by the tax authorities, and resulted in over 1 billion RMB in tax benefits between 2010 and 2016.

This case is based on the European Commission’s public investigation report dated March 7, 2019, titled “State Aid SA.50400 (2019/NN-2) – Luxembourg – Possible State Aid in Favour of Huhtamäki.” You can click here to access the full report.