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TAX

Companies accused of cheating tax system

International companies in Sweden avoid tax by setting false transfer prices, a controversial former pharmaceuticals executive has said.

Transfer pricing is used to transfer goods between different divisions within a company, particularly between divisions in different countries. According to Peter Rost, former marketing director at pharmaceutical companies Pharmacia and Pfizer, this practice is used to move profits from Sweden to countries with lower taxes.

The OECD’s guidelines state that parent companies and subsidiaries must have separate profits.

“What they do is continually keep an eye on sales in Sweden, for example, and then ensure that they set transfer prices at just the right level for there to be no profit or nearly no profit in Sweden,” said Peter Rost to Sveriges Radio.

Sweden has recently tightened the law in this area, meaning that companies have to demonstrate to the tax authority how they have calculated prices. But Jan Mattsson, head of the tax authority’s foreign section, said it would remain difficult to prove that companies have adapted prices to move profits abroad.

Peter Rost was fired by Pfizer in 2005. He then sued the company for having sacked him for blowing the whistle on illegal business practices in the company’s Pharmacia subsidiary.

BOMB

Denmark suspects two Swedes over explosion at tax authority

Two Swedish citizens are suspected in connection with last week’s explosion at the Danish Tax Agency. One of the two is in police custody.

Denmark suspects two Swedes over explosion at tax authority
Copenhagen Police superintendent Jørgen Bergen Skov addresses the press. Photo: Philip Davali / Ritzau Scanpix

Copenhagen Police superintendent Jørgen Bergen Skov confirmed the arrests to press on Wednesday morning.

“Both individuals are suspected of carrying out the detonation at the Tax Agency,” Skov said.

One man, aged 22, was arrested in Swedish city Malmö on Tuesday and will be extradited to Denmark. Once he reaches Copenhagen he will appear for preliminary court proceedings, which the prosecution will request take place behind closed doors.

Swedish newspaper Kvällsposten reports the 22-year-old has no previous criminal convictions in the country.

The second man, a 23-year-old, is yet to be detained but an international arrest warrant for him has been issued, Skov said.

“During the night, we also searched several addresses in Sweden. We hereby confiscated what we believe to be a car used by the suspects,” he said.

“We have one suspect on the loose, which means we must be careful about what we say, out of consideration for the investigation,” he added.

The superintendent did not add any detail about how police were able to connect the two individuals to the August 6th explosion.

Skov also stressed that police do not believe the tax authority blast to be connected to a similar incident at a police station in Copenhagen’s Nørrebro neighbourhood in the early hours of Saturday.

“There is nothing to suggest (a connection),” he said.

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