Glencore has denied allegations it has paid no tax at all in the last three years, with its head of Australian coal providing figures.
Last week the miner was accused by Fairfax Media of not paying taxes for the last three years, despite earning around $15 billion globally.
According to the article in The 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.
At the time a Glencore spokesperson told Australian Mining that “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 statement.
In an internal email obtained by Australian Mining, Glencore’s head of Australian coal assets, Peter Freyberg has revealed the miner’s tax payments since 2007 and rubbished the claims that appeared in The Age and the Sydney Morning Herald.
The email, in full, is below:
In recent days there has been ongoing media speculation regarding Glencore’s tax payments in Australia. This is as a result of a second, very inaccurate report in The Sydney Morning Herald (27th June). Several of the false claims have been repeated in the newspaper’s front page story today.
In response to every question we have received on this subject, including from the SMH, we have confirmed that we pay tax in Australia and comply with all our tax obligations here and in each jurisdiction in which we operate. We have open and regular meetings with the Australian Taxation Office as would any major business such as ours.
We have also consistently argued that tax on its own is a limited measure of our contribution – and we still believe this.
As stated previously, we have paid $8 billion in taxes and royalties in Australia since 2007. We include our royalty payments for a specific reason - even at times when the market is poor and some operations are loss-making, royalties are still paid. They are one of the most significant sources of revenue for State Governments.
Of the $8 billion tax and royalty figure, our corporate income tax payment was $2 billion. Our royalty payments represent approximately half of the combined figure, with a variety of other taxes such as employer payroll taxes and stamp duty making up the rest.
The SMH article of 27th June stated that Glencore hasn’t paid any tax in Australia over the past three years.
This is wrong.
As you will be acutely aware, for much of this period the resource industries in which we participate have faced significant challenges including low commodity prices, high input costs and a robust Australian dollar. Profitability is significantly lower than during the preceding four years – the reality is that a significant proportion of Australia's coal mines are currently operating at a loss and although we run an efficient business, we are not immune to the market conditions. Despite these difficult circumstances, we paid more than $400 million in corporate income tax in respect of this period.
It is important to know that the SMH reports in question are not just wrong in relation to the income tax claims, the reports contain numerous factual errors and are misleading; for example, what we assume is a rounded up revenue figure is presented as (taxable) “income”.
In the days ahead, we will be following up directly with the newspaper to address the inaccuracies reported.
Head of Coal Assets