Home ListingJune 5, 2014

UK Union Launches Attack on CPPIB, APG Over Tax

A workers’ union claims Canadian and Dutch pension funds are “dodging” tax through investments in a London shopping centre.

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(June 5, 2014) – Two major pension funds have hit back at allegations they are “tax dodging”, levelled by a UK workers’ union.

Unite, the biggest union in the UK, accused the Canada Pension Plan Investment Board (CPPIB) and Dutch group APG of “tax dodging” in reference to the pensions’ stakes in a London shopping centre.

The union has sided with Australian union United Voice in an ongoing dispute over pay and conditions for cleaners in Westfield’s chain of shopping malls around the world.

United Voice has been trawling through the company’s accounts and claims to have found evidence of “tax dodging”—claims which have now been repeated by Unite and chiefly aimed at CPPIB, which owns a 25% stake in the Westfield Stratford shopping complex. APG also owns 25%—and was referenced in Unite’s statement—while Westfield owns 50%.

Unite claimed that, by investing in the shopping centre through vehicles based in Jersey and Guernsey, the pensions had reduced their tax bills in a manner which was “morally unacceptable”.

Unite General Secretary Len McCluskey said: “Tax dodging by those who can afford to pay and by those who benefit from public expenditures may be legal, but it is morally unacceptable.

“While tax minimisation by multinationals has unfortunately become the norm, we are deeply concerned to learn about the role of a major government pension fund being complicit in a significant tax dodging scheme.”

But CPPIB hit back, saying in a statement: “CPPIB honours its tax obligations around the world. Consistent with its approach to good governance, CPPIB maintains a transparent relationship with government authorities, including the UK’s HM Revenue & Customs with which we routinely consult to confirm the appropriate taxation of our UK-based investments.”

A spokesman for APG said the investment in Westfield Stratford City was established in full compliance with UK tax laws and “has nothing to do with tax dodging”.

“We invest for 4.5 million Dutch workers and pensioners with the aim of making decent, stable returns,” he said. “One of the things we have to take into account is in Holland pension schemes don’t pay corporation tax. So we always look to make sure we don’t pay a lot of corporation tax in other countries either.

“It is our fiduciary duty to reduce costs for members whether through fees or taxes—we feel obliged to do that.”

He added that corporation tax will also have been reduced due to the losses incurred by investors during the shopping centre’s construction. It is standard practice in the UK to offset such losses against tax on profits in the early years of a company’s existence.