Australian coal producer accused of sending billions of dollars to tax havens to avoid paying tax

One of Australia’s largest mining corporations has been accused of using offshore tax havens in Switzerland and Bermuda to hide millions, but it has hit back.

Mining giant Glencore has hit back at a new report claiming the company failed to pay more than $500 million in tax.

Centre for International Corporate Tax Accountability and Research, Tax Justice Network, and Publish What You Pay launched a report claiming Glencore’s complex multinational corporate structure “sends billions of dollars to offshore tax havens like Switzerland and Bermuda”.

The report’s lead researcher Dr Claire Parfitt said between 2016-18, the mining giant avoided paying millions to the Australian Government.

“Glencore makes billions every year digging out Australian coal but pinches pennies when … contributing to the tax base,” Dr Parfitt said.

The report claimed Glencore had “abused transfer pricing” and “shell company structures” by improperly allocating profits and debt to avoid tax.

Glencore general counsel Shaun Teichner rejected the claims, stating Glencore complied with transfer pricing and CbCR requirements, was fully committed to corporate tax transparency, and from 2018 had adopted the Australian Board of Taxation’s voluntary Tax Transparency Code.

“Glencore reports its international related party transactions to the ATO and other governing bodies annually,” he said.

A Glencore spokesman said the company rejected the Centre for International Corporate Tax Accountability and Research report, and co-operated and responded to all questions.

“We are disappointed that most of the facts we provided have been ignored,” the spokesman said.

“The report includes a number of glaring errors and misrepresentations, including … its interpretation of the ATO tax transparency data for 2013-16, the fact that corporate income tax is paid on taxable profits not on revenue, the closure of our Singapore coal marketing function, financing of the purchase of the remaining stake in the Cerrejon mine, and copper sales from Australia to Switzerland from 2007-09, which the Australian courts have ruled as compliant.

“CICTAR’s proposed unitary tax solution would actually reduce Glencore tax payments because it would bring forward mine rehabilitation deductions.

“Since 2019, Glencore’s Australian operations have paid $19 billion in taxes and royalties.”

Publish What You Pay national director Clancy Moore said ATO corporate tax transparency data showed Glencore made more than $28 billion revenue in Australia from 2013-2016 but paid $0 in corporate income tax.

Mangoola Open Cut (Mangoola), located near Wybong, NSW, is owned by Glencore. Picture: Dean Sewell

Mr Teichner said other factors impacted the amount of corporate income tax paid since 2010 including a fall in prices across various commodities, material financing costs relating to a series of acquisitions of mines from third parties, and foreign exchange impacts.

“Since 2010, Glencore Australia has paid $3.8 billion in corporate income tax,” he said.

“We expect very significant tax payments to be made in relation to our 2021 earnings.

“There are currently no ATO audits concerning Glencore coal sales, both current and historic, to Glencore companies in Switzerland, Singapore or other locations.”