Coal giant Glencore has perhaps the most tortuously complex corporate structure in Australia. This morning, over on my website, we revealed one of its entities as being the No. 1 tax dodger in the country, top of the michaelwest.com.au Top 40 Tax Dodging charts.
Our analysis and rankings are based on the Australian Tax Office transparency data which now extends for three years.
Glencore Investment Pty Limited racked up total income of $27.9 billion through 2014 to 2016. Taxable income — after massive deductions — was $108,107,993 on which tax payable was zero.
Glencore is Australia’s largest coal miner and one of the world’s top miners and commodities traders with a colourful corporate history and a reputation for ruthlessness.
Fairfax Media once received a threat for “injurious falsehood” when covering Glencore’s tax affairs in 2014. As the group’s financial statements are not consolidated at the top of the corporate tree in Australia, it is not possible to get an exact view of how much tax has been paid, or where it has been paid.
A centrepiece in the Glencore tax strategy used to be a loan from an overseas entity for $3.4 billion at interest rates of up to 9%. This has since gone. However, it was struck at the tail of the biggest coal price boom in history when Glencore’s operations here were spitting out billions in cash and Australia hardly needed a loan from overseas at 9%.
Glencore then pops up in the Paradise Papers. According to this Guardian story, the Australian Tax Office had been investigating the company for siphoning billions from Australia to Bermuda via cross currency interest rate swaps.
“On 12 April 2013 two Bermuda-based arms of Glencore — Glencore Capital and Glencore Finance (Bermuda) — changed $25 billion in Australian dollars to US dollars through Glencore Australia Investment Holdings.”
Near the top of the group’s labyrinthine maze of corporate entities — often subject to restructuring so we will deploy the past tense — were the consolidated financial statements of Glencore Operations Australia Pty Ltd. This is not the head of the snake, however. Its parent was Glencore Queensland Ltd, whose parent, in turn, was Glencore Investment Holdings Australia Ltd. Then there was Glencore Investment Pty Ltd, then — what appears to be the head entity in Australia — wait for it … the furtively named GHP 104 160 689 Pty Ltd whose parent was in Bermuda.
Silver medalist in these tax rankings is US oil major ExxonMobil, which expects not to pay tax for at least another two years.
Third place, despite the rise in energy prices, is EnergyAustralia.
Before the Senate Inquiry into Corporate Tax Avoidance in 2015, the government and the Tax Office denied claims that there was a substantial problem with multinational tax avoidance.
The ATO has since launched a crackdown — including new economy giants such as Google and Facebook — bringing billions of dollars of revenue back onshore. The ATO has said another $5 billion has come in the door thanks to its enforcement efforts.
A similar parallel might be drawn with the royal commission into the banks, where the government adopted its “nothing to see here” posture before the sector, in recent weeks, has been exposed for rampant, systemic corruption.