Glencore Refutes Claims it Paid Zero Tax in Australia

Australia's largest coal miner, Glencore, paid almost no taxes for the last three years on income of $15 billion, according to a new report. The company is accused of reaped billions of dollars in profits while it “radically reduced its tax exposure by taking large, unnecessarily expensive loans from its associates overseas.”

Glencore’s coal chief executive, Peter Freyberg, sent an email to staff last week stating it had paid $400 million in taxes including $7.5 billion in royalties and taxes, including $2 billion in corporate income tax, in Australia since 2007.

“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,” Freyberg wrote.

“Despite these difficult circumstances, we paid more than $400 million in corporate income tax in respect of this period.”

The aggressive tax avoidance tactics of Swiss-based Glencore were identified in an independent analysis of the company’s accounts for Fairfax Media by an expert in multinational financing. 

The analysis showed Glencore used irregularities in its borrowing and lending as well as significantly increasing its coal sales to related companies with no explanation – pinpointing a so-call transfer pricing, also known as profit-shifting.

The activity is a breach of Section IVA of the Income Tax Assessment Act – which deals with schemes designed to comply technically with the law but whose “dominant purpose” is to avoid tax.

''The reality is that the whole of the Glencore Xstrata Group is now run as a series of business units controlled by one company (Glencore Xstrata Plc, incorporated in the UK, listed on the London and other stock exchanges), with its registered office in Jersey (a tax haven) and its head office is in Baar (Switzerland),'' the report said.