Alusuisse Dodges Iceland Taxes

Alusuisse, the sixth largest aluminum company in the world, has created a stir in Iceland over the multinational's apparent transfer-pricing manipulations.

Allegations in the Icelandic press and statements from the government claim Alusuisse hiked the price of imported alumina in order to declare lower profits - and pay less taxes - in Iceland.

Iceland's minister of industry and energy, Hjorleifur Guttormsson, announced in mid-December that "the price of imported alumina is much higher than one would normally expect." Guttormesson added, "it appears that the alumina price increased at sea by 54.1 percent."

Iceland and Alusuisse are currently discussing this "increase at sea" - the difference between the value of alumina Alusuisse declared to Australian officials and the value Alusuisse declared to Iceland. Alusuisse, the largest foreign investor in, Iceland, imports alumina from a plant at Gove, Australia, which is 70 percent owned by Alusuisse.

Alusuisse's reactions to allegations of a transfer-pricing scandal have varied. Paul Muller, a vice president of Alusuisse, told an Icelandic newspaper that once Iceland receives a detailed report of Alusuisse's operations, "this misunderstanding would be cleared up."

A general manager of Alusuisse's Iceland plant, Ragnar Halldorsson, had a more belligerent response. He was quoted in a Reykjavik paper as saying the problem was simply that "Communists want to hinder cooperation with foreigners."