Swedish furniture giant Ikea, who love to brag about their contributions to society in Australia, while banging on about their commitment to the environment as a key marketing tool, have once again legally avoided paying millions in profits on the billions they are generating from Australian consumers.

Between 2017 and 2023 the Ikea business generated $10.63 billion in revenue from Australian consumers, but only managed to deliver $89.9 million in profits, with unexplained expenses, franchise fees and payments ever-growing net losses pushing the bulk of their revenues into the coffers of their tax haven subsidiaries.

The Australian recently reported that Ikea’s latest accounts lodged with the Australian Securities and Investment Commission reveal that their Australian subsidiary, recorded a net loss of $48.496m for the 12 months to August 31, 2023, marking an almost $130m turnaround in profitability from its 2022 accounts.

“This is a business that appears to be legally milking Australia of profits, or a fair share of their massive revenues” said one leading retailer.

The minute their rich earnings from Australian consumers, appear to meet their accountants, the revenues appear to then plunge into deep into losses due to what the Australian describes as “A mysterious settlement of interest-free intercompany loans”.

They claim that in 2023 profits have been incredibly scarce, almost non-existent, with hundreds of millions of dollars in unexplained expenses, franchise fees and other accounting entries transforming huge gross profits into ever-growing net losses.

As for their financial expenses used to minimise profits, Ikea management have even included a “loss from the derecognition of financial liability” of $145.497m and “financial expenses” of $16.7m.

The upshot was a total of $160.476m in losses hitting the bottom line, which then enabled Ikea Australia to produce a net loss of $48.496m.

Over the years Ikea Australia which is owned and managed by Inter IKEA Systems B.V., based in the Netherlands a tax haven has made more losses than profits.

This business is in turn, owned by Inter IKEA Holding B.V.

This Company is fully owned by the Stichting INGKA Foundation which is based in the tax haven of Liechtenstein.

INGKA is named after Ingvar Kamprad, its Swedish founder.

While the business has positioned themselves as an affordable home brand with Australians told that that they contribute to society, when in fact their financials reveal that the only thing, they are contributing to is the billionaire pockets of their owners.

We have all heard the Ikea spiel, quality products, affordable prices and a do-it-yourself assembly attitude.

They even claim that their products come from the notably Nordic Country of Sweden when in reality Ikea manufactures none of their products in Nordic Countries, with the bulk of the products manufactured in China and in developing countries such as Vietnam, Malaysia and Myanmar, and also in Eastern European countries such as Romania and Poland for the simple reason it’s cheap and they can make more profits while using tax havens to minimise their profits.

A key partner of Sonos the business is currently moving into home automation with a new range of Chinese manufactured products.

This is a Company who wants to pay the minimum amount of taxes in Australia while also telling consumers they are a responsible Company engaged in the sustainable maintenance of wood resources.

The reality is that wood passes through multiple brokers and in developing countries local enforcement of illegal timber harvesting can be lax or non-existent.

As a point of difference Ikea claims to own their own timber forests in Romania and Baltic States. It’s not known how much of their China manufactured products are made used timber from these forests.

The Australian claims that Ikea’s latest report explains that the accounts included a non-recurring loss of $145.497m and associated tax benefit of $43.649m arising from “the early settlement of long-term interest free intercompany loans”.

On the final day of Ikea Australia’s financial year, August 31, there was a non-cash transaction where it issued 428.868 million ordinary shares to its parent, INGKA Holdings Overseas for $1 each. In consideration for these shares, a promissory note was received for the same amount.

That promissory note was then used to settle interest free loans payable to INGKA with a face value of $428.868m.

The difference between the face value of these loans and the carrying amount of the loans at the date of the settlement resulted in a loss of $145.5m on derecognition of that liability, the accounts explain.

No explanation has been given for the intercompany loan.

The Australian claims that in 2014, a document among the “Luxembourg leaks” reportedly showed that Ikea’s profit growth in Australia between 2004 and 2014 has trailed sales growth – or occasionally went in the opposite direction – as it reduced its taxable income by paying more than $2bn in franchise fees, licence fees and royalties to its European parent.

These practices are not illegal nor are their latest engineered tax losses.

Update: Ikea responded to our story claiming in part:

IKEA Australia is incredibly pleased to have delivered strong business results and sales growth of 4.8% in FY23, in challenging economic conditions.

In the FY23 financial statement, a loss of $48.5 million AUD is reported for IKEA Australia.

This loss is due to the early settlement of long-term interest free loans with parent company, Ingka Holdings Overseas B.V. Excluding this, IKEA Australia generated a profit after tax of $53.3 million AUD in FY23.

*This was on revenues of $1.78 billion which means that that their claimed tax is less than 3.5%.

In Sweden GST is 30% and individuals pay 28.5%Share of revenue from social Insurance taxes are 21.5%.