Foreign agriculture giants avoid Australian tax bill

DOZENS of foreign multinational companies have collectively earned billions of dollars buying and selling Australian agricultural commodities but have paid no income tax to the Australian Taxation Office.
According to a Corporate Tax Transparency list for 2014-15 released recently by the ATO, almost all the foreign companies trading Australian grain made losses – most for the second year in a row.
They include Sumitomo, PentAG Nidera, Archer Daniels Midland, Bunge, CHS, Louis Dreyfus, Glencore, Wilmar Gavilon, Noble Resources Australia and Australia Milling Group – some of the world’s biggest grain-trading companies.
Of the grain-trading firms, only Chinese state-owned food processing and trading company COFCO and Mitsubishi subsidiary Riverina (Australia) paid income tax in Australia in 2013-14 and 2014-15.
The Corporate Tax Transparency list is part of a global strategy to ensure companies pay their fair share of tax in the country where income is earned, particularly since the Global Financial Crisis eroded several nations’ tax bases after 2008.
So far, only two years of data – 2013-14 and 2014-15 – have been released.
HOW MUCH THE MAJOR AG COMPANIES HAVE PAID. Source: ATO
The agricultural companies — foreign and Australian — not paying tax cover most rural commodities, including grain, wool, dairy, wine and pork.
National Farmers Federation president Fiona Simson said while she was not clear on the tax circumstances of individual agricultural traders, all companies need to contribute to the Australian economy.
“Everybody should be paying their fair share of tax,” Ms Simson said. “It would be important to understand how they (foreign agricultural companies) are operating and why they are not paying tax.”
Fonterra appears on the list through its Australian-registered subsidiary, New Zealand Milk (Australasia), which paid no tax on $1.84 billion in revenue in 2014-15 and $1.96 billion the previous year.
A Fonterra spokeswoman said the company had paid income tax in Australia in six of the past 10 years, but not for the past four years. “The list published by the ATO does not disclose accounting profit and loss data, such as trading losses, which can be used by corporate entities to offset taxable income,” she said.
According to the 2014-15 list, Glencore was the biggest foreign company buying rural commodities in Australia in terms of income.
Glencore Grain’s income was included under Glencore Investment, which earned $4.61 billion in 2013-14 and $4.97 billion in 2014-15 and paid no income tax.
Storage and handling business Viterra was included under Glencore Australia Investment Holdings, which had revenue of $1.07 billion in 2013-14 and $1.48 billion the following year but did not pay income tax in either year.
Company spokesman Francis de Rosa said Glencore, in making acquisitions, had often inherited “complex legacy structures”. “We have an open and transparent relationship with the ATO and comply with all our tax and fin­ancial reporting obligations in Australia,” Mr de Rosa said.
Of the other grain-buying companies not paying tax, Sumitomo — which owns the Emerald Group — was had income of $1.57 billion in 2014-15.
ADM Trading Australia, a subsidiary of US commodity giant Archer Daniels Midland, recorded income of $1.2 billion but paid no tax to the ATO.
Singapore trader Wilmar Gavilon and Dutch commodity trader Louis Dreyfus did not pay tax. Neither responded to The Weekly Times.
Noble Resources Australia and PentAG Nidera recorded income of $182 million and $136 million respectively in 2014-15. They have been taken over by Chinese state-owned enterprise, COFCO, which notched up revenue of $279 million in Australia in 2014-15 through its subsidiary COFCO (Australia). But unlike its subsidiaries, COFCO (Australia) did pay tax to the ATO two years ago — $59,357.
By comparison, Australian companies CBH Grain and GrainCorp recorded income of $3.36 billion and $2.88 billion, respectively, in 2014-15.
CBH paid tax of $5.3 million and GrainCorp $934 million that year. Canadian-owned Australia Milling Group did not pay income tax in 2013-14 and 2014-15, despite earning income of $156 million and $163 million respectively.
AMG chief executive Peter Wilson said this season was the first good year in four for most grain companies. “We pay our corporate taxes in accordance with the laws,” Mr Wilson said. “Australia was seen as the land of milk and honey but it didn’t work out that way.”
LIST COUNTS TAX PAID
THE Corporate Tax Transparency list for 2014-15 aims to ensure greater financial accountability by companies operating around the world.
The CTT list records the total income, taxable income and tax payable of Australian public companies and foreign corporates earning more than $100 million, and Australian private companies with revenue above $200 million.
CPA Australia head of policy Paul Drum said the G20 nations and OECD tried to clamp down on issues such as transfer pricing and use of tax havens after the global financial crisis in 2008. ATO assistant commissioner, public groups international, Malcolm Allen said the Corporate Tax Transparency list originated in 2013 from concerns over the apparent ease with which foreign companies could shift tax or profits between businesses around the world.
But companies that did not pay tax in a single year or consecutive years were not necessarily avoiding tax.
Mr Drum said many companies were carrying forward losses from the GFC or repaying offshore loans from the parent company.
“But a valid question might be why do they keep trading here if they keep on making losses year after year,” he said.
Source: http://www.weeklytimesnow.com.au/news/national/foreign-agriculture-giants-avoid-australian-tax-bill/news-story/6f30e64fa8b270a13c6c3e2bd27c57b0

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