26 May 2013

Top firms' tax haven links revealed

Almost two-thirds of Australia’s top 100 companies listed on the stock exchange have subsidiaries in tax havens or low-tax jurisdictions, a new report shows.

Thirteen of the top 20 companies,  including two of the big four banks, have entities in well-known tax havens such as the Cayman Islands, Luxembourg, the British Virgin Islands and Bermuda.

A Uniting Church report, Secrecy Jurisdictions, the ASX100 and Public Transparency, reveals 61 of the top 100 companies held subsidiaries in ‘‘secrecy jurisdictions’’ as of April 2011 that have been targeted by tax authorities for sheltering companies dodging tax.

News Corporation, Westfield and the Goodman Group were among the worst offenders, the group said, holding more than 50 entities in low-tax jurisdictions each.

The report shows that while many of the companies may do legitimate business in low-tax jurisdictions such as Hong Kong and Singapore, many subsidiaries exist with little evidence of commercial activity.

A subsidiary owned by the Commonwealth Bank called Burdekin Investments can be traced to Ugland House, a resort-style office building in George Town, the capital of Caribbean tax haven the Cayman Islands.

The building has become known for housing thousands of post-box companies that exist simply to take advantage of local tax rules. A spokesman for the bank said it was looking to close down the entity and would not explain what it did or whether it had any employees.

The report shows 10  ASX 100 corporations have subsidiaries in Jersey, making it one of the most popular locations for offshore entities among Australian companies, after Hong Kong and Singapore.

The Cayman Islands, Luxembourg, Switzerland and Ber- muda were also popular destinations, with many companies owning multiple entities in each.

“These are places that fail to meet international standards on transparency, on anti-money-laundering laws, and on tax law co-operation,’’ said Mark Zirnsak, the director of the church’s Justice and International Mission Unit and author of the report.

“Companies should be willing to be transparent and public about why these subsidiaries are in these locations given the concerns around inadequate regulation.’’

Mr Zirnsak  said the report came at a crucial time for the federal government, which was struggling to fund essential services without making cuts.

The report comes amid a global crackdown on the elaborate tax minimisation strategies of Apple and Google. This week, a US Senate inquiry exposed the elaborate corporate operating structure of Apple, which used subsidiaries in Ireland and Singapore to minimise its tax.

According to its 2012 annual report, Telstra controls 20 subsidiaries registered in well-known tax havens – 11 in the British Virgin Islands, four in Bermuda, four in Jersey, one in Mauritius and one in the Cayman Islands.

The company defended itscorporate structure, with a spokesman telling Fairfax Media: "Some of the subsidiaries are operating entities, others are companies holding investments in other companies, some are dormant and some are being liquidated.

''We pride ourselves on operating to the highest standards of corporate governance and on creating significant social value, through employment, investment and business activities."

The report also shows News Corporation has more than 70 subsidiaries across the Cayman Islands, British Virgin Islands, Luxembourg and Mauritius. The company is registered in the US state of Delaware, which has attracted its own criticism for sheltering post-box companies taking advantage of the state's soft tax rules.
Fairfax Media, owner of The Age, has two subsidiaries based in Singapore, and has closed a third that was based in Hong Kong.

The heavy use of offshore units by banks, particularly Macquarie, to minimise tax, has led the federal government to clamp down on the practice in the recent budget.

''If we see gaping holes in our laws then we need to do our best to legislate to close them,'' Assistant Treasurer David Bradbury said this week.

Mr Zirnsak said the report was likely to be a ''significant underestimate'' of the number of subsidiaries in secrecy jurisdictions.

 theage.com.au 25 May 2013

These 'tax havens' have been known to the authorities for decades, as they have been set up by governments for the corporate elite to take advantage of.

AS stated by the article, these 'offenders' which News Corp is a notorious one, will now be bought to justice?

An offender is one who breaks the law.

There is clearly one law for the plebs and one for the brethren.

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