Aus­tralians 'wis­ing up' to use of tax havens, says An­drew Leigh

The Guardian Australia - - News - Joshua Robert­son

An­drew Leigh, the shadow as­sis­tant fed­eral trea­surer, has said com­pa­nies us­ing off­shore tax havens to “get around cor­po­rate tax” in Aus­tralia risk los­ing what they save in tax via dam­age to their rep­u­ta­tion.

Speak­ing to Guardian Aus­tralia in the wake of rev­e­la­tions Adani has ex­panded its use of tax havens for its lo­cal op­er­a­tions, Leigh said the Aus­tralian public was “wis­ing up on tax havens”.

Leigh said his com­ments were not di­rected to­wards any par­tic­u­lar com­pany, but that most use of tax havens was “clearly about try­ing to get around cor­po­rate and in­di­vid­ual in­come tax” and the public had grown averse to sup­port­ing busi­nesses “that don’t pay their fair share of tax”.

How­ever, Aus­tralia re­mained “very much a lag­gard” in tack­ling the is­sue, with the Turn­bull gov­ern­ment of­fer­ing “zilch, zip, nada” in the way of a pol­icy re­sponse, Leigh said. That was de­spite the Aus­tralian tax com­mis­sioner, Chris Jor­dan, and oth­ers recog­nis­ing that global co­or­di­na­tion on tax needed to “fo­cus on the harm that’s done by tax havens”, Leigh said.

“Th­ese are places in many cases with more com­pa­nies than peo­ple,” Leigh said. “They’re set up ef­fec­tively in or­der to drain rev­enue from the rest of the tax sys­tem.”

Guardian Aus­tralia re­vealed on Wed­nes­day that Adani had regis­tered com­pa­nies for its Aus­tralia so­lar busi­ness that were held by the wealthy Adani fam­ily via pri­vate com­pa­nies in the Cay­man and Bri­tish Vir­gin is­lands.

Adani de­clined to com­ment on the ar­range­ments but its Aus­tralian chief ex­ec­u­tive has pre­vi­ously dis­missed any sug­ges­tion the lo­cal op­er­a­tions would be “hid­ing prof­its” via hold­ing com­pa­nies in tax havens.

For­mer La­bor trea­surer Wayne Swan the same day la­belled BHP Aus­tralia’s “worst tax dodger” over a $1bn dis­pute with the tax of­fice over its use of low-tax Sin­ga­pore as a mar­ket­ing hub for its Aus­tralian coal. Swan said it was “high farce” that BHP’s chief ex­ec­u­tive, An­drew Macken­zie, had been given a $1m bonus “for en­hanc­ing trans­parency and tax rep­u­ta­tion”.

Com­pany tax in Aus­tralia is 30% but pri­vate com­pa­nies in Sin­ga­pore – in­clud­ing par­ent com­pa­nies of Adani’s Aus­tralian busi­nesses – have ac­cess to a con­ces­sion­ary rate of 5%. The Bri­tish Vir­gin Is­lands charges no cor­po­rate or in­come tax, while the Cay­man Is­lands charges no cor­po­rate or in­come tax on money earned else­where.

Leigh said if he were a di­rec­tor of a cor­po­ra­tion with tax haven links, “I would be say­ing to other mem­bers of the board that sav­ing a lit­tle bit of tax this year isn’t worth it for the rep­u­ta­tional risk that it will cost in the fu­ture”.

Asked why a cor­po­ra­tion would choose to have tax haven com­pa­nies in its struc­ture, Leigh, a for­mer eco­nom­ics pro­fes­sor at the Aus­tralian Na­tional Uni­ver­sity, said: “It’s got to be about min­imis­ing tax.”

He said the Turn­bull gov­ern­ment had “shown very lit­tle in­ter­est in en­gag­ing on tax havens, very lit­tle recog­ni­tion even of the threat that tax havens pose to a well-func­tion­ing tax sys­tem”.

By con­trast La­bor in May re­leased pro­pos­als to force transna­tional busi­nesses to come clean on their tax haven links and how much tax they paid world­wide, Leigh said.

Com­pa­nies with more than $1bn rev­enue world­wide would have to pub­licly re­port tax paid in each ju­ris­dic­tion, and all com­pa­nies that did busi­ness in tax havens would “have to dis­close that to share­hold­ers as a ma­te­rial tax risk”.

“Com­pa­nies which are play­ing fast and loose in tax havens are not do­ing their share­hold­ers any favours, given that the world is likely to move strongly against tax havens in com­ing years,” Leigh said.

Un­der the pro­pos­als, com­pa­nies would also have to de­clare their “coun­try of tax domi­cile” if ten­der­ing for a gov­ern­ment con­tract, and su­per­an­nu­a­tion funds would have to work to­wards dis­clo­sure rules for tax haven in­vest­ments.

Leigh said La­bor’s mea­sures could be passed “through par­lia­ment be­fore the end of the year if the gov­ern­ment was se­ri­ous about it”.

He said there was a risk that a need for joint global ac­tion on tax havens “be­comes not a goal but an ex­cuse” for do­ing noth­ing.

“I think we need to rec­og­nize there’s ac­tu­ally a bunch of good things Aus­tralia can do,” he said. “We are in the 20 largest economies in the world, so it’s not a mat­ter of us wring­ing our hands and say­ing, ‘we’re a lit­tle tad­pole, we can’t pos­si­bly act.’

“We’re a se­ri­ous econ­omy, oth­ers do look to what we do. If we’re not crack­ing down on tax havens, the world has a right to ask why not.”

A spokesman for the fed­eral trea­surer, Scott Mor­ri­son was con­tacted for com­ment.

Com­pa­nies play­ing fast and loose in tax havens are not do­ing their share­hold­ers any favours.

The Bri­tish Vir­gin Is­lands, which charges no cor­po­rate or in­come tax. La­bor’s An­drew Leigh says Aus­tralia is lag­ging in tack­ling tax min­imi­sa­tion. Pho­to­graph: Todd VanSickle/AP

Shadow as­sis­tant trea­surer An­drew Leigh. Pho­to­graph: Ju­lian Smith/AAP

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