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Swiss-based commodities trader Glencore has rejected a Fairfax Media report that said by claiming Australian tax breaks, the company had paid zero tax over the past three years, despite raking in $15bn.

 

But on Friday Glencore claimed they had paid more than $8bn in royalties and taxes in Australia over the past seven years, adding that the company employed thousands of Australians.

 

Fairfax Media reported that Glencore took out $3.4bn in loans from its associates overseas, then claimed tax breaks in Australia on the huge interest payments. The loans carry interest rates of up to 9%, Fairfax said, double what the company would have paid by borrowing from Australian banks.

 

The apparent loophole was identified in an independent analysis of the company’s accounts carried out for Fairfax Media by a multinational financing expert, who was not identified.

 

''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 expert report to Fairfax said.

 

''The truth is that Glencore Coal Investments Australia's operations in Australia are, because of the group's business model, branch operations of the Swiss-domiciled parent entity, which uses the now dormant legal shell of an Australian body corporate in an attempt to hide the reality of its branch business in Australia.”

 

But a spokesman for Glencore in Australia, Francis de Rosa, said on Friday that the claims were inaccurate.

 

“Our core point is that Glencore complies with all tax rules and regulations in Australia and in each jurisdiction where we operate,” he said.

 

“Like all of Australia’s top 100 companies, Glencore has open and regular meetings with the Australian Taxation Office. The measure of our economic contribution to Australia is not just about taxes or royalties, which we pay on every tonne of coal we sell.

 

“However, for the record, we have paid more than $8bn in royalties and taxes in this country over the last seven years.”

 

Glencore has operated in Australia for more than 15 years.

 

In a further statement sent to Guardian Australia, De Rosa said Glencore’s coal business had invested heavily in sustaining, expanding and building new coalmines in Australia. The Fairfax Media report “utterly failed” to understand the nature of resource and commodity investments and the cyclical nature of the business, it said.

 

The Australian Taxation Office said it could not comment on the amount of tax paid by Glencore, citing confidentiality.

 

“The ATO takes all matters of alleged tax evasion or avoidance seriously,” a spokeswoman said.

 

“When provided with any information that alleges or suggests potential tax evasion or avoidance, we consider it, assess the risks and take action where appropriate.”

 

 

Source: http://www.theguardian.com/