Australia’s largest coal miner avoiding hundreds of millions in tax payments, short-changing Australian communities
EMBARGO: FRIDAY 29 OCTOBER 8AM AEDT
Sydney, AUSTRALIA: New research reveals that coal mining giant Glencore may avoid hundreds of millions in tax payments to the Australian Government, leaving the Australian community short changed.
Today, the Centre for International Corporate Tax Accountability & Research (CICTAR) and Tax Justice Network and Publish What You Pay affiliates in Australia launched a report exposing Glencore’s complex multinational corporate structure that sends billions of dollars to off-shore tax havens like Switzerland and Bermuda.
Dr Claire Parfitt, lead researcher for the project said: ‘We estimate that between 2016-18 Glencore avoided paying more than half a billion dollars in taxes to the Australian Government. Glencore makes billions of dollars every year digging out Australian coal but pinches pennies when it comes to contributing to the tax base. Not only is Australia’s biggest coal miner Glencore profiting off Australian coal and dodging taxes, they’re also leaving Australian communities to foot the bill after their coal fuels climate impacts such as bushfires, storms, droughts and floods.’
Mark Zirnsak, TJN-Australia said: ‘Australia is at the core of Glencore’s tax avoidance operations. The Australian government must ensure that giant mining companies like Glencore pay tax where they make profits.’
Clancy Moore, Publish What You Pay – Australia said: ‘Glencore appears to be cheating communities of much needed funding for healthcare, education and dealing with the climate crisis. The Australian government must enforce greater transparency to keep companies like Glencore accountable.
Glencore, the US$42 billion commodities giant, is the world’s largest thermal coal exporter and Australia is its largest source of coal. According to the Australian Taxation Office (ATO) corporate tax transparency data, Glencore made over AU$28 billion in revenues in Australia from 2013-2016 but paid $0 in corporate income tax.
During a 2015 Senate Inquiry into corporate tax avoidance, Glencore promised to stop using Singapore as a marketing hub for its coal. Through this scheme, Glencore, like other mining giants, shifted profits from Australia to Singapore where the negotiated tax rate was much closer to zero than Australia’s 30%.
Since that time, Glencore’s Australian business is channeled into Switzerland, where according to its own corporate reports, Glencore pays zero income tax. Glencore’s Swiss entity, GIAG, is the largest trading partner of the Australian business. GIAG accounts for US$4.6 bn in sales from the Australian companies or 45% of total sales in 2020. The Australian companies paid GIAG US$998 million for goods and services and issued US$1.4 bn in loans to the Swiss parent.
Complex related party transactions present a high risk of tax avoidance and make it very difficult for external auditors and tax authorities to assess compliance with tax rules. The failure of the ATO’s recent legal challenge of Glencore’s discounted copper sales from Australia to the same Swiss entity provides a clear indication that further reforms are desperately needed.
High quality photos of Glencore’s mining operations in Australia are here.
The report is available here.
The company’s response is available here.
Media Contact: Claire Parfitt 0414 766 476