Was the tax administration slow to take an interest in McKinsey’s situation? According to the Senate report on the influence of consulting firms in public policies, whose report was published on March 17, the prestigious house installed on the Champs-Elysées did not pay any corporate tax in France between 2011 and 2020, while it achieves a turnover of several hundred million euros there (329 million in 2020), partly with the French State.
A finding that the members of the commission of inquiry were able to draw up by recovering from the tax authorities documents relating to the tax situation of McKinsey & Company France and McKinsey & Company SAS, the firm’s two main French entities, over the period 2011 to 2020.
During this period, the cabinet was not controlled by the tax administration, according to the Senate. An audit was launched in late 2021, but senators were not aware of another audit during the 2011-2020 period. According to The chained Duck, it is the project of commission of inquiry which would have pushed the tax administration to launch a procedure. A point disputed by the Minister of the Economy, Bruno Le Maire, Wednesday March 30 in the morning, on Europe 1. He assured that a “tax audit” had been launched by Bercy against McKinsey, “before Senate report” published mid-March. “McKinsey will pay all the taxes it owes France ruby on the nail”, insisted Mr. Le Maire, for whom the government did not “no lessons to be learned in the fight against tax optimization”.
According to a source within the executive, the tax audit would have been launched by the national and international audit department around mid-November 2021, a few days before the letter sent by the commission of inquiry to the minister to request the access to tax information relating to McKinsey, sent on 8 December. According to the same source, the tax authorities would however have started to take an interest in McKinsey before the pandemic, without sending a request for a document or notifying an audit. The McKinsey firm reaffirmed, Saturday, March 26, to respect the French tax rules, specifying that one of its subsidiaries had paid corporation tax for six years over the period studied by the Senate, without specifying which one or for what amount.
Mounts allowed within a certain limit
McKinsey was able to cancel its corporation tax by deducting from its profits in France the costs invoiced to other group entities abroad – in this case to its parent company located in the State of Delaware, in the United States. States – as if they were service providers, through a fairly standard “transfer pricing” mechanism. The fact of deducting these services, which can be general expenses, remuneration for the use of the brand, or the provision of personnel, automatically reduces the taxable profit and can lead to zero taxation.
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