Foreign investors pay no tax or use havens to outbid farmers for land and water
Foreign funds and corporations are being accused of using tax havens to secure Australian land, water, grain handlers and food processors.
Foreign investment funds and corporations are being accused of using tax havens and exemptions to outbid Australians for land and water, while others take ownership of the nation’s grain handlers and food processors
Canada’s largest state-owned pension fund PSP Investments, which has bought up more than $4 billion of Australian farms and irrigation water, paid no tax on the $34 billion net income it earned in the 12 months to March 31, on the back of $253 billion in global assets.
The investment giant’s 2021 annual report states: “PSP Investments and the majority of its subsidiaries are exempt from Part I tax under paragraphs 149(1)(d) and 149(1) (d. 2) of the Income Tax Act (Canada), respectively”.
But PSP Investments media team said “PSP Investments tax-exempt status relates to Canadian taxes” and its local entities were subject to both federal and state taxes in Australia.
Other companies are registering affiliates and holding companies in tax havens, such as the tiny Islands of Jersey, the Caymans or Bermuda.
NSW Farmers Association vice-president Xavier Martin said there was growing anger over the tax advantages global corporates had in outbidding locals for land and water.
“I have heard many stories of farmers simply not being able to compete with multiple low and no-tax entities and multi-billion-dollar trust funds that have significant tax advantages,” Mr Martin said.
The 2021 annual report of International commodity giant Viterra, which owns six Australian grain terminals and more than 55 storage sites in southern Australia, states it is “a privately held company incorporated and domiciled in Jersey”.
Viterra Limited’s (formerly the Glencore Agricultural Group) financials show it earned $38 billion in 2020, incurred costs of $36.9 billion and paid $140m in tax.
The Jersey Island companies’ registry shows Viterra Limited lodged a 2020 annual return showing it was owned by Glencore Agriculture, whose majority shareholder is yet another Jersey company Danelo Ltd, with a 49 per cent stake held by two Canadian-registered companies.
But the grain giants spokeswoman said “Viterra pays taxes in all jurisdictions globally …(and) the Jersey incorporation has no impact on the amount of tax we pay”.
Recent research funded by The International Centre for Tax and Development found the effective tax rate on profits shifted to Jersey was 0.1 per cent, while it was just 0.5 per cent in the Cayman Islands.
“The Cayman Islands, Luxembourg, the Netherlands, Switzerland, Singapore, Bermuda and Puerto Rico are the largest profit shifting destinations,” the Centre’s March 2021 research report found.
Given the time it takes to gather and track tax records the Centre was only able to analyse 2016 data, which showed multinational corporations “shifted US$1 trillion of profits to tax havens …, which implies approximately US$200-300 billion in tax revenue losses worldwide.”
A search of the Cayman Island’s companies register shows 24 companies listed as Cargill entities, including Black River Cargill Commodity partners and numerous investment and holding companies.
But Cargill Australlia, which owns AWB and holds 50 per cent of meat processor Teys Australia, says it has nothing to do with the Caymans Island entities.
“I can confirm there is no relationship or association between the entities registered in the Cayman Islands and Cargill Australia’s operations,” local spokesman Peter McBride said
“Cargill Australia complies with all Federal and State Government tax laws and regulations in Australia.”
China Mengniu Dairy Company Limited is also listed in the Caymans. However The Weekly Times was unable to identify if it was the same firm that was forced to abandon a $600m bid for Lion Dairy & Drinks last year, after it was rejected by Federal Treasurer Josh Frydenberg.
Other multinationals registered in the Caymans, but whose links to Australian companies are unknown, include Australian Agricultural Holdings, Blue Sky Strategic Australian Agriculture, Hassad Holdings Limited, SWIF Australia Agriculture and Acton Investments.
Mr Martin said the debate was not simply about foreign investment in agriculture, but “the effect of avoiding Australian taxes and on-the-ground experience of rural Australians seeking to grow or start a family farm business in an unfair investment environment.
“I’ve seen it multiple times and it’s clearing out valleys, whose towns then lose families, schools, fire brigades and pubs.”
But not everyone agrees that overseas corporates are gaining huge tax advantages over local farmers and businesses vying for a slice of the grain handling and food processing businesses.
Growth Farms Australia director David Sackett said the OECD was already trying to set up a minimum tax rate across all jurisdictions, so large corporates “can’t go anywhere to minimise tax”.
Mr Sackett said foreign corporates had to pay stamp duty on their property purchases, local corporate taxes for all locally based (registered) operations and capital gains tax if they exited.
Even so the ATO last year ruled foreign-registered companies and individuals were exempt from paying capital gains tax on water entitlements.
Other agents, who advise overseas corporates, told The Weekly Times the ATO’s transfer pricing regime helped reduce foreign corporates shifting profit to tax havens.
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