#United States #New York #animal welfare #JBS #Tax Avoidance

Uncovering JBS's Tax Avoidance Strategies

Recently published research by World Animal Protection and the Centre for Research on Multinational Corporations (SOMO) has shed light on the controversial tax strategies of JBS, the world's largest meat producer. This Brazilian company, a major supplier to iconic brands such as KFC, McDonald's, and Walmart, has been accused of exploiting loopholes in the tax system to avoid significant tax payments to the U.S. and many other countries.

JBS's Financial Maneuvering

Between 2019 and 2022, JBS reportedly evaded an estimated $221 to $442 million in corporate taxes by establishing a network of offshore companies registered in places known for their lenient tax regimes, like Luxembourg and Malta. Reports indicate that during this time, JBS’s subsidiary companies in Luxembourg alone recorded about $2.8 billion in pre-tax profits, yet they fulfilled only a minimal portion of their tax obligations—about $0.5 million in net corporate income tax during the same period.

This tax avoidance does not just impact government revenues; it imposes a greater financial burden on consumers who ultimately end up covering the costs through higher prices. JBS’s recent movement to list on the New York Stock Exchange (NYSE) has raised eyebrows as it transferred its primary listing from Brazil to the U.S., along with the creation of a new holding company, JBS N.V., registered in the Netherlands, a country notorious for tax benefits.

Criticism from Advocacy Groups

World Animal Protection has been particularly vocal about these practices, emphasizing that while JBS benefits from minimal taxation, the company’s unethical practices—including child labor violations and environmental destruction—have made it notorious in the industry. This year alone, JBS has faced multiple fines totaling nearly $200 million for various labor law violations and antitrust practices in the U.S.

Tim Vasudeva, representing World Animal Protection, criticized such corporations for burdening everyday taxpayers while benefiting from significant profits. “Multinationals like JBS use consultants to navigate tax loopholes and avoid their fair share,” he stated. This statement reflects a growing concern among consumer advocacy groups about the broader implications of corporate tax avoidance on society and local economies.

Investor Concerns

Vincent Kiezebrink from SOMO elaborated on the risks posed to investors by JBS’s tax strategies, suggesting that shareholders have not been adequately informed about the potential costs associated with the company’s tax practices. Allowing JBS access to U.S. capital markets without scrutiny could further solidify its monopolistic hold in a critical sector.

Investors should be wary, as tax policies might tighten in response to scrutiny, which could lead to steep financial repercussions for firms that rely heavily on such offshore structures. The investigations and reports by World Animal Protection and SOMO have sparked discussions about corporate transparency and ethical responsibility in taxation.

Conclusion

As the conversation continues, it becomes increasingly evident that the practices of large corporations like JBS raise significant ethical questions. Their ability to exploit tax regulations not only contributes to the financial strain on governments but also raises concerns among consumers supportive of fair trade practices. It remains critical for regulatory bodies in the U.S. and beyond to enforce compliance and ensure that companies uphold both ethical business practices and their obligations to pay taxes in the jurisdictions they profit from. As JBS deepens its roots in U.S. markets, it brings forth essential discussions regarding corporate accountability and consumer trust.