McDonald's to set up new base in UK - where it will pay corporation tax

Fast food giant McDonald's confirmed on Thursday (8 December) that it will set up a new base in the UK, where it will pay corporation tax.

The New York-listed company said the new office would be responsible for the majority of royalties earned outside the US, adding it would move most of the international functions from Luxembourg to the UK.

The move, which will begin in January next year, marks a significant turnaround, as McDonald's warned in the run-up to the Brexit referendum that leaving the European Union would drive up unemployment.

In July the fast-food chain announced it would create 5,000 jobs after franchise managers made a £600m ($757m, €710m) investment to restructure its 1,250 restaurants in the UK.

"McDonald's selected the UK for the location of its new international holding structure because of the significant number of staff based in London working on our international business, language, and connections to other markets," it said in a statement.

McDonald's added it paid over $2.5bn in corporate tax in the 28-country bloc between 2011 and 2015, but its tax affairs in Luxembourg remain under investigation from EU authorities with an average tax rate approaching 27%.

Luxembourg has a corporate tax rate of as low as 20%, but a number of international firms, such as PepsiCo, Ikea and FedEx, received tax rulings that lowered effective taxes on profits transferred to the country.

On Tuesday, energy and petrochemicals giant Ineos, founded by industrialist and prominent Brexiter Jim Ratcliffe, announced it would move its corporate headquarters and owners' tax domicile from Switzerland to the UK.

The move turns around a decision by Ratcliffe – the 20th richest man in the UK, according to the Sunday Times Rich List – to move Ineos' head office from Hampshire to Rolle back in April 2010.