Just like bottom of the harbour days......


‘We Will Take Action:’ Australian Tax Chief Calls For Global Probe Into Leak Revelations


By Neil Chenoweth

November 5, 2014




Australia’s tax chief may go after some of the country’s biggest corporations for potential discrepancies in their tax payments following the release by ICIJ and partners of confidential agreements made between Luxembourg and multinational corporations.  Chris Jordan, Australia’s Tax Commissioner, told the Australian Financial Review that he has written to other countries to collaborate on a “joint investigation” of the data made public on Wednesday by ICIJ and its partners.  “We will be checking the data that has been published and if we see discrepancies from what we have been told, we will take audit action,” Jordan told the AFR.

According to an analysis by the AFR, the Australian government’s own sovereign wealth fund - called the Future Fund - and dozens of other companies negotiated agreements with the small European nation to reduce taxable profits.

Beyond Australia’s sovereign wealth fund, AFR reported that companies with “property interests” made up a large number of the Australian names in the leaked files. AFR also reported on the Australian arm of furniture company Ikea, and the strategies it uses to shift a significant portion of its profits to low-tax jurisdictions like Luxembourg and the Netherlands...........The companies used hybrid debt structures, total swap returns, royalty payments and intra-group Business in Europe, profits in the Caymans  Read the full story at AFR.com


International PwC tax schemes exposed

6 Nov 2014


Tax Commissioner Chris Jordan is pursuing a global investigation of inter­national and Australian companies exposed by one of the biggest leaks of tax information ever for using Luxembourg to shift profits and avoid tax.

The Future Fund, AMP, Macquarie Group, Lend Lease, Goodman Group and dozens of other Australian com­panies negotiated secret tax deals with Luxembourg to reduce their taxes by routing profits through tax havens, according to the tax-leak information The Australian Financial Review shared yesterday with Mr Jordan.

Nearly 28,000 pages of leaked documents reveal how 343 Australian and foreign corporations used accounting firm PwC to slash their tax bills to nearly zero in some cases.  The companies used hybrid debt structures, total swap returns, royalty payments and intra-group loans to reduce taxes. While not illegal, reducing tax avoidance by big companies using these techniques is one of the objectives of the Group of 20 leaders summit in Brisbane next week.

The ability to move profits around the world purely by paperwork in return for what seems a minor fee to Luxembourg is a recurrent feature in the leaked tax agreements.  A 2010 agreement by the Future Fund appears to limit any income tax on trades in specific distressed debts to $136,000 a year, no matter how large the profits from a $500-million portfolio in Europe.

The Washington-based Inter­national Consortium of Investigative Journalists, which has led a review of the documents by more than 80 ­journalists in 26 countries, is releasing 548 Luxembourg tax agreements dating from 2002 to 2010 on its website at icij.org. They are available at afr.com.

Mr Jordan told the Financial Review the Tax Office was looking at the data to make sure companies paid their tax.   “We will be checking the data that has been published and if we see discrepancies from what we have been told, we will take audit action,” he said.  “I have written to our tax treaty ­partners, inviting their collaboration in joint investigation of this data to ­understand any tax risks and to explore opportunities for joint com­pliance approaches.”

Future Fund managing director David Neal said the fund’s Luxembourg structure “is commonly used by insti­tutional investors and external investment managers”.  The structure is predominantly about providing operational efficiency and effective risk management.  “Indeed, as a sovereign investor, had the Future Fund directly invested in the underlying loans it would have ended up in substantially the same tax position.”

Business in Europe, profits in the Caymans   -   The fund’s guidelines state: “The Future Fund’s activity is not about avoiding tax but rather avoiding duplication of tax. The investment returns remain taxable in the underlying source country and in the investor home country.”  But the Future Fund’s 2010 Luxembourg agreement appears to sidestep almost all tax............

AMP, PwC make the most of Luxembourg   -   Rubicon Group in 2008 used a sequence of profit participating loans to finance four Austrian properties. PPLs, as they are known, allow profits to be repatriated as capital repayments rather than dividends.  AMP Capital Investors in 2009 allocated $1 billion to invest in Babcock & Brown and Macquarie projects including Kemble Water, MGN Gas, Angel Trains and Thames Water...........

read more  http://www.afr.com/p/national/international_pwc_tax_schemes_exposed_Em8iAWSxolmpl7emQH4FAI