Thursday, 14 July 2011

Capitalism at its finest - Tax evasion at its best

McDonald's argues it is a supermarket rather than restaurant 
in Russia. US fast food chain McDonald's has persuaded the Russian authorities that its outlets are supermarkets rather than restaurants in a landmark lawsuit that blocked an attempt by the Russian taxman to almost double its tax bill.

In a legal battle that is likely to see dozens of other fast food chains in the world's largest country following suit, McDonald's successfully argued that it should be classified as a food retailer for tax purposes rather than as a restaurant since many of its products are pre-packaged and sold to customers in the style of a supermarket rather than a restaurant.

It is a decision that will allow McDonald's in Russia to continue paying ten per cent tax on its profits rather than the eighteen per cent tax levied on restaurants. McDonald's has led a charmed life since it opened its first outlet in Moscow in the then Soviet Union in 1990.

Wednesday, Jan. 31, 1990, hundreds of people line up around the first McDonald's
restaurant in the Soviet Union at Moscow's Pushkin Square, on its opening day. 

Its first flagship restaurant served 30,000 customers on its first day, an absolute record, and it now has a network of 276 outlets across Russia.

Still rapidly expanding to meet huge demands for its fast food, it is patronised by almost one million Russians a day who consume specially Russianised versions of McDonald's fare such as "beef a la russe" as well as the hamburgers and sandwiches sold all over the world.

In a deal that the Moscow city authorities later challenged unsuccessfully through the Russian courts the first two McDonald's stores in Russia which occupied prime locations in Moscow were granted a special 20-year rent deal which saw them pay just one rouble (less than 1p) per square metre of space. That deal is still in place.

Source: The Telegraph

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