The operation of Alcoa in Iceland has been losing money from the start, RÚV reports. “Made-up loss” and “scandal” is the view of Indriði Þorláksson, former director of Internal Revenue. CEO of Alcoa Magnús Þór Ásmundssson says the cost of financing explains the loss.
Last year, Alcoa in Iceland, the parent company of the aluminum smelter in Reyðarfjörður, East Iceland, run under the name of Alcoa Fjarðarál ehf, paid its parent company in Luxemburg close to ISK 3.5 billion (USD 26.5 million, EUR 24.8 million) in interest.
Alcoa has never paid so-called company tax here and never turned a profit, according to RÚV. At the same time, a total of ISK 57 billion has been paid out of the operation here to Luxemburg in the form of interest payments, which are not taxable and are deducted from the profit here in Iceland. Thus, Alcoa in Iceland has never reported a profit and never paid taxes of any profit.
Financial loss, though, is not what the parent company Alcoa in the US sees. In an annual report from 2012, the Fjarðaál operation in Iceland is praised for great and even record profit compared to more than 20 other Alcoa aluminum smelters.
The report reads, “In Norway and Iceland, affordable energy and technical advancements have helped our smelter operations to be profit leaders among our global primary businesses.”
No such profit has been recorded in the company’s books in Iceland.
Alcoa’s operation in Iceland is financed by Alcoa Global Treasury, located in Luxemburg. Alcoa Fjarðarál owes that company ISK 210 billion (USD 1.59 billion, EUR 1.49 billion), or more than Alcoa Iceland’s total assets. In the past eight years, Alcoa Iceland has paid close to ISK 60 billion (USD 455 million, EUR 425 million) in interest, but its debts have hardly gone down at all during that period.
Former Director of Internal Revenue Indriði Þorláksson says the company’s profit simply leaves the country in the form of interest payments. “Of course it’s a scandal to keep it this way. Of course we should put our fist on the table and say, ‘This must be changed.’”