Tax chief Chris Jordan leads global response to Paradise Papers leak

The ATO is mining massive trove of documents and lawyers and accountants are in tax chief’s sights.

Tax Commissioner Chris Jordan. Picture: John Feder

Tax Commissioner Chris Jordan is spearheading an international probe into last month’s 13.5-million-document Paradise Papers data leak, as he also revealed a $50 million windfall from the earlier Panama Papers.

In his first interview on the Australian Taxation Office’s ­response to the Paradise Papers, Mr Jordan said he would focus on professional services firms — including accountants, lawyers and tax specialists — as the initial targets of his investigations, for potential breaches they committed on behalf of high-flying clients.

“From our point of view, what we’re trying to do is to focus on the intermediaries, focus on the accountants, the trust companies, the lawyers, (and) who’s putting the people into these things,” he said.

Mr Jordan also revealed he used his global tax leadership position to summon fellow tax bosses from around the world — including the US, Britain, China, Japan, Germany and France — to begin the global response to the papers.

Mr Jordan revealed that within days of the Paradise Papers revelations, he took charge of the issue with other nations’ tax commissioners in his role heading up the world’s leading anti-tax avoidance body, the Joint International Taskforce on Shared Intelligence and Collaboration.

“As chair of JITSIC, I have brought together key representatives from 37 tax administrations to commence the global response to the Paradise Papers,” he said.

The Paradise Papers have ­exposed some of the world’s biggest companies who use the Bermuda-founded offshore law firm Appleby, which establishes com­pan­ies and trusts on behalf of clients in jurisdictions providing both discretion and minimal tax rates. The firm has offices in a number of tax havens such as Bermuda, the Isle of Man, Jersey and the Cayman Islands.

From a local perspective, the Paradise Papers have already revealed financial structuring techniques used on part of the late Michael Hutchence’s estate, plus corporations with multi-billion- dollar Australian presences such as commodities giant Glencore.

Mr Jordan has revealed the ATO is already mining the massive trove of documents to find potential tax revenue and breaches. “Analysis is under way using the ATO’s and other tax authorities’ sophisticated data-matching technology,” he said.

The Paradise Papers have shone a light on complex financial products used by some of Appleby’s clients, including derivatives called cross-currency swaps. Glencore is one of the companies that has ­admitted to using these products.

These products can see a loan in one currency swapped to a loan in another, in a transaction that also sees a swapping of interest payments and risks. While these derivatives can be used legitimately, the ATO is continuing to scrutinise several companies with local operations that have used these swaps over possible tax avoidance. The ATO is openly concerned that swaps used between related companies within a multinational can be used for tax-minimisation purposes by effectively shifting taxable profits out of Australia or minimising interest withholding tax.

Mr Jordan refused to confirm whether the ATO was looking at Glencore in light of the Paradise Papers revelations. Glencore has historically paid a low proportion of its revenues in tax in Australia. However, it has stated that it had used the swaps legitimately, and added that it had dropped its use of them in Australia last year.

The Tax Commissioner said he would not be taking any rash or kneejerk action on the Paradise Papers. “Because of the extent and complexity of the data, it is too early to draw any conclusions,” he said. “(It’s) a huge amount of ­material to try and index, because you’ve got to make meaning out of it, (and) you’ve got to be able to have it in a searchable fashion.”

Meanwhile, Mr Jordan has also revealed that last year’s Panama Papers revelations have already yielded a $50m-plus windfall for the ATO, as a result of his leadership of global investigations into that mass data leak.

He said he took control within three days of co-ordinating intelligence-sharing operations with tax authorities from about 30 countries into the Panama Papers, a data leak predecessor to the Paradise Papers, this time from Panamanian legal firm Mossack Fonseca. Australia has been a key beneficiary of the shared intelligence initiated by Mr Jordan in his international leadership role. “There’s about 50 million we’ve already got and there are two criminal investigations going on,” he said.

Mr Jordan is supremely confident of more scalps, but said ­patience was critical. “We will get more, but it is a slow burn, like when (Project) Wickenby was first formed,” he said.