The Ukrainian poultry company MHP uses mailbox companies in the European tax havens Luxembourg and Cyprus to avoid paying taxes in its home country.
MHP is one of the largest exporters of chicken products to the European Union. Research by the Foundation for Research on Multinational Corporations (SOMO) shows that MHP has avoided paying at least 98 million euros in taxes to Kiev through EU tax havens.
Since 1998, MHP has grown rapidly and is now one of the largest exporters of chicken products to the EU, with a turnover of over 2 billion dollars in 2019. The company has also benefited significantly from an export credit insurance provided by the Dutch insurer Atradius, backed by financial guarantees from the Dutch state.
The company not only uses fiscal structures abroad but also pays no corporate tax and hardly any VAT in its own country. This means it is largely exempt from Ukrainian taxes. It remains unclear whether this conflicts with European competition rules.
Within the European Union, the company became notorious for circumventing EU import quotas on chicken fillets by leaving a small piece of bone in them. This 'Batman cut' was widely introduced throughout the EU, then processed into regular chicken fillets at the Jan Zandbergen Group in Veenendaal, reports Globalinfo.nl.
MHP’s tax avoidance adds to various other controversies. The company has faced complaints about violating the rights of local residents, corruption, air and water pollution, as well as intimidation and mistreatment of activists.
The SOMO report concludes that development banks such as the EBRD, IFC, and EIB should refrain from future investments in MHP. Motions in the Dutch House of Representatives by the Party for the Animals in 2015 and 2019 have resulted in the Netherlands voting against new loans for MHP within the EBRD.