A Senate inquiry commission on Thursday accused the French entities of the McKinsey firm of tax optimization, such that they would not have to pay any corporate tax between 2011 and 2020, to which the firm responded to respect the set of French fiscal and social rules.
The McKinsey firm is subject to corporation tax (IS) in France but its payments have been zero euros for at least 10 years, denounced the Commission of Inquiry into the Influence of Consulting Firms on Public Policy .
However, its turnover on the national territory reached 329 million euros in 2020, of which around 5% in the public sector and it employs around 600 employees in France, insist the senators in a document sent to AFP.
Cartoonish example of tax optimization
It seems that this is a caricatural example of tax optimization, judges the commission of inquiry. Its mechanism would be as follows: the French entities of McKinsey pay transfert price the parent company, based in Delaware (United States), to offset shared expenses within the group.
However, these transfert price (…) constitute a burden for companies, which leads to a reduction in their tax result and, consequently, the amount of their taxation, accuse the senators.
In the case of McKinsey, the amount of the transfer prices would be such that it would contribute to making the tax result in France nil or negative, for at least 10 years. For the tax authorities, the challenge is therefore to verify that McKinsey has assessed them at their fair value, concludes the commission of inquiry.
The senators’ accusations are based on the documentary and on-site checks they carried out, in particular at the Ministry of the Economy and Finance.
The documents they reviewed relate to the period 2011-2020 and relate to the two main McKinsey entities registered in France: McKinsey & Company Inc. France and McKinsey & Company SAS.
The prosecutor will be seized
This information is published two months after the hearing by the commission of the head of McKinsey’s public sector, Karim Tadjeddine. I say it very clearly: we pay corporate tax in France, he then assured.
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The declarations of Mr. Karim Tadjeddine (…) are likely to constitute false testimony before a commission of inquiry, warned the senators on Thursday.
As a result, the public prosecutor will be seized. It will be up to the prosecution to continue the investigations, indicated during a press conference the rapporteur of the commission, Senator Liane Assassi (group CRCE majority communist).
Reacting to these accusations, McKinsey assured Thursday evening in a press release to respect all the applicable French tax and social rules and said to have paid corporation tax in the years when the firm made profits in France.
With regard to transfer prices, McKinsey has an approach which is not specific to France and which applies to the various countries where it is present, the company further declares. This approach is known to the French tax authorities, adds the group.
Apart from the case of the cabinet, there are no other (legal) steps relating to possible false testimonies within the framework of the hearings carried out by the commission, indicated Thursday the president of the commission, the senator LR Arnaud Bazin .
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