Australian biotech company CSL accused of shifting $5bn in revenue to Switzerland
Australia’s vaccine powerhouse, CSL, is being accused of shifting $5bn to Switzerland to crush its tax bill at a time the company was tied up in giant government contracts.
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Australia’s third-biggest company, vaccine and blood products supplier CSL, has been accused of shifting up to $5bn in revenue to Switzerland over the past five years in order to crush its tax bill here.
CSL is heavily supported by the taxpayer, receiving federal government contracts worth $4.4bn in the same time period – as well as orders for 50m doses of Covid vaccine – but a new analysis shows it pays little tax in Australia despite its big profits.
The Centre for International Tax Accountability and Research (CICTAR) says CSL appeared to be moving revenue from high tax jurisdictions such as Australia to Switzerland, where corporate tax rates can be very low and there are special deductions available for intellectual property including patents on medicines.
CSL was formerly the Commonwealth Serum Laboratory and was owned by the government until it was privatised in 1994.
Since then it has been one of Australia’s best-performing companies, becoming a global industry player and declaring a profit before tax this year of $US2.66bn ($A4.17bn).
However, its accounts show it paid just $US419m ($657m) in tax – about half of what would be expected given Australia’s 30 per cent company tax rate.
Data from the federal government’s Austender website shows that over the past five years CSL has been granted contracts worth $4.4bn. Over the past 10 years it has reaped $5.18bn in federal government contracts while since the earliest date from which data is available, 2005, the total is $8.75bn.
During the pandemic it also manufactured 50m doses of the AstraZeneca Covid vaccine for the Australian government, but the Health Department said the amount spent “is commercial-in-confidence, (and) therefore has never been released”.
Its executives have also been richly rewarded, with former boss Paul Perrault getting a final payday of $US4.5m ($A7m) while current chief executive Paul McKenzie received $US4.4m ($A6.9m).
In a report, CICTAR says CSL hasn’t explained how at least $5bn in revenue from within the company’s global operations ended up in Switzerland over the past five years.
Tax rates in Swiss cantons, where CSL has subsidiaries, vary from 21.02 per cent to as little as 13.04 per cent, and the country also has a “patent box” scheme where research and development spending can attract hefty tax deductions.
CSL has “has consistently recorded disproportionately large profits in Switzerland” while at the same time declaring losses or small profits at home in Australia, CICTAR says.
CICTAR’s principal analyst, Jason Ward, said the findings contradicted CSL’s claim to support tax transparency through country by country reporting of payments to government coffers.
“In CSL’s case, this privatised entity is happy to take billions in government contracts in Australia, but contributes very little back into government coffers to fund the public health, education and services we all rely upon,” he said.
“How can responsible businesses – who don’t abuse tax havens and hire PwC and other tax advisers – compete when multinationals continue to shift profits? It’s unfair and time for a little sunlight.”
A CSL spokesperson defended the company’s tax practices.
“The majority of CSL’s tax is paid in the countries where we have the most significant operations,” the spokesperson said.
“While CSL generates revenue in each of the countries in which we operate, profits are declared partly in the countries where they are sold but also in the countries where the original research and development and manufacturing took place – for CSL this is largely in Australia, the US, Switzerland, Germany and the UK.”
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Originally published as Australian biotech company CSL accused of shifting $5bn in revenue to Switzerland
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