Judge opines: ‘tax law deals in economic realities, not legal abstractions’
A US federal court has rejected two ‘tax shelter transactions’ by Dow – designed to create $1 billion (£660 million) in deductions – and imposed penalties on the firm.
Chief Judge Brian Jackson made the case for the penalties on the grounds that any reasonable and prudent person should have known the artificial tax benefits created by the scheme were ‘too good to be true’, adding that ‘Dow viewed its tax department as a profit centre’.
The schemes were created by investment bank Goldman Sachs and law firm King & Spalding, which created a partnership operated out of the Dow European headquarters in Switzerland.
Dow has recent form in this area. In September 2012, the company ran into trouble over its R&D tax credits claims.