SYDNEY, Australia, Oct. 29, 2021 (GLOBE NEWSWIRE) -- On the eve of the G20 Leaders’ Summit, where global tax reform will be a hot topic, new research reveals that a multi-billion-dollar extractives giant may be avoiding hundreds of millions in tax payments. According to the report’s authors – the Centre for International Corporate Tax Accountability and Research (CICTAR), the Tax Justice Network and Publish What You Pay affiliates in Australia – the Glencore example demonstrates that current OECD proposals to reform multinational corporate tax do not go far enough.
Dr Claire Parfitt, leader researcher on the report, said: "Glencore extracts not only ecological resources like coal and copper, but also strips out financial viability of the states where it operates. If Glencore avoids tax obligations in Australia, other countries with less resources for enforcement are much more vulnerable. An effective reform of the global tax system must address this."
Glencore, the London Stock Exchange listed US$42 billion commodities giant, is the world’s largest thermal coal exporter. It is incorporated in Jersey, headquartered in Switzerland and structured through a complex multinational web including holding companies in Bermuda and other tax havens.
Glencore’s use of transfer (mis)pricing, a core feature of the current global tax system, is second to none. The operation relies heavily on transfer pricing rules that permit Glencore (and other multinational firms) to shift billions of dollars between subsidiaries in different jurisdictions and avoid tax obligations where resources are extracted. In mid-2021, Glencore engaged in a baffling purchase of the troubled Cerrejón mine in Colombia, while its former joint venture partners dumped stranded coal assets.
Following scrutiny by the Australian Government, Glencore’s coal marketing hub in Singapore was shut down and switched to Switzerland, where the company reports that it pays no income tax. Glencore’s Australian business now sells its coal via a Swiss subsidiary, which accounted for 45% of total sales from Australia in 2020. The same Swiss subsidiary was implicated in a transfer mispricing case in Zambia. In late 2020, Glencore subsidiary, Mopani Copper Mines, was found liable and fined for abusing transfer pricing rules in Zambia, through its sales contracts with Glencore’s Swiss marketing arm.
Media Contact: Claire Parfitt 0414 766 476 or claire.parfitt@cictar.org
