Despite reporting decades of miserable results, Swedish furniture company IKEA’s Australian arm has earned an estimated $1 billion in profits since 2003, and almost all of it has been exported tax-free to Luxembourg and the Netherlands, according to an analysis by the Australian Financial Review.
Documents submitted by accounting firm PwC to Luxembourg officials help unlock one of the mysteries of Australian retailing – how the flat-pack giant could lift its sales here by 500 per cent while its profits barely budged.
The Luxembourg documents detail secret advance tax agreements in 2009, and identify IKEA entities that have received hundreds of millions of dollars from the Australian operation – including franchise fees, interest payments and fees for a “risk agreement” that to date has cost $260 million.
In contrast to the offshore profits, IKEA reported losing money here every year from the mid-1980s until 2002, when accumulated losses stood at $67 million.
Read the full story at AFR.com
