Is Mindaugas Kuzminskas on the trading block?November 6, 2017
Watch the trailer for new Lithuanian movie “Stebuklas”/”Miracle”November 7, 2017
LONDON – Bono has expressed horror that a Lithuanian shopping centre business he invested in may have fallen foul of the country’s tax rules.
In a statement, the U2 frontman said he would be “extremely distressed if even as a passive minority investor … anything less than exemplary was done with my name anywhere near it”.
He reacted after Lithuania’s tax authorities said they were preparing to examine the details of the business over concerns that it unlawfully avoided profit tax.
Bono was revealed on Sunday to be an investor in a Guernsey-based business that owns the Aušra shopping centre in Utena, in the north-east of the country.
Following the disclosures in the Paradise Papers, Lithuania’s state tax inspectorate said it had “commenced control procedures with regard to the mentioned company”.
“It should be noted that STI commences an inspection on taxpayers based on the evaluation of risk of tax breaches. Taxpayers having offshore transactions more often score higher points of risk,” the authority said.
Bono said: “I’ve been assured by those running the company that it is fully tax-compliant, but if that is not the case, I want to know as much as the tax office does, and so I also welcome the audit they have said they will undertake.
“I take this stuff very seriously. I have campaigned for the beneficial ownership of offshore companies to be made transparent. Indeed this is why my name is on documents rather than in a trust.
“The fact is, I welcome this reporting. It shouldn’t take leaks to understand what’s going on where. There should be public registries so that the press and public can see what governments, like Guernsey, already know.”
Bono’s investment in the shopping centre was made via a company in Malta called Nude Estates and then transferred to Guernsey.
The arrangement is not illegal, but experts in Lithuania have suggested the underlying company incorporated for the purchase of the property may have broken local rules to reduce its tax bill.
Analysis of the Lithuanian company’s accounts show it has paid no tax in the country, despite recently making a profit, most of it from rent from retailers. As well as interest from loans being used to reduce taxable profits, a down valuation of the property in 2010 produced losses that have offset any money made from rent.
Bryan Meehan, who runs the Nude Estates companies, said Germany and Lithuania seemed good prospects for real estate investment in 2005.
“As manager of Nude Estates, I approached friends and investors around the world, including Bono, to take a minority investment in the company,” he said. “Bono’s involvement has been 100% passive and he has not visited any of the locations, nor has he had any involvement in the decision making.”
Sigitas Jautakis, the Lithuanian director of Nude Estates 2, told the news website 15min.lt the company would comply if asked to pay more tax.
“If it is … determined [by the tax office] that we have to pay some profit tax, without accounting for the [mall] revaluation, OK,” he said. “The tax inspectorate hasn’t carried out any inspections or anything, but they should first of all delve deeply into the entire situation.”
By Hilary Osborne / The Guardian