Glencore has been accused of paying almost no tax in Australia over the last three years, whilst earning around $15 billion globally.
According to the article in today’s Age, the miner “reduced its tax exposure by taking large, unnecessarily expensive loans from its associates overseas", its author Michael West writes.
“At up to 9 per cent, the interest rates on these $3.4 billion in loans were double what the company would have had to pay had it simply borrowed the money from the bank.”
The piece goes on to say the miner carried out profit-shifting within the company, which is a clear breach of the Income Tax Assessment Act.
'”The truth is that Glencore Coal Investments Australia's operations in Australia are, because of the Group's business model, branch operations of the Swiss-domiciled parent entity, which uses the now dormant legal shell of an Australian body corporate in an attempt to hide the reality of its branch business in Australia,” an independent report carried out as part of the article’s investigation states.
''There also appears to be an increase in transfer pricing activity which may explain differences in revenues disclosed in the Australian accounts versus revenues reported as being from the same source in the group's consolidated accounts.''
When Glencore was contacted, a spokesperson stated “the claims we have paid no income tax over the last three years is preposterous”.
“Glencore complies with all tax rules and regulations in Australia and in each jurisdiction where we operate,” the miner said in an official statemen
“The amount of tax our company pays is driven by the taxation legislation put in place by Local, State and Federal Governments and is a matter of public policy. Like all of Australia’s top 100 companies, Glencore has open and regular meetings with the Australian Taxation Office. The measure of our economic contribution to Australia is not just about taxes or royalties (which we pay on every tonne of coal we sell). However, for the record, we have paid more than A$8 billion in royalties and taxes in this country over the last seven years.”
The miner went on to slam the article and investigation, stating that “the article utterly fails to understand the nature of resource and commodity investments and the cyclical nature of the business”.
“Our contribution is measured over decades with investments that serve communities for a generation through job creation and support for local businesses. With every new investment, we take on significant financial risk in addition to the highly volatile nature of resource commodities global cycles.
“In the past five years, Glencore’s coal business has invested heavily into sustaining, expanding and building new coal mines in Australia. This additional $8 billion investment has created thousands of jobs and will serve Australia for decades.”
It is understood Glencore has begun examining the numbers put forth in the article.