Australia’s largest coal producer, the secretive Swiss commodities trader, Glencore, topped our Top 40 Tax Dodgers chart last year. This year, it is not even on the list.
What happened? Did it suddenly pay a lot of tax? No, tax payable was precisely $1,000 – a suspiciously round number which appears to be either a total fluke or a cheeky wave to yours truly. Total income for this one Glencore entity was almost $15 billion for the 2017 year alone.
Last year, we aggregated the three years of tax transparency data from the Australian Tax Office (ATO) and did a count-down of Australia’s Top 40 corporate tax dodgers. We also rolled out a chart of the Top 40 taxpayers, both the biggest and the best.
This year, we will again roll out the Top 40s, now with four years of data to consider from the ATO. Top of our list of Dodgers last year – that is, those companies which managed to wipe out 99.5 per cent or more of their taxable income over three years – was Glencore Investment Pty Limited. Here is the honour:
Glencore’s three-year aggregate “total income” of nearly $28 billion produced just under $108,107,993 of “taxable income” – a margin of 0.39 per cent. It reported zero “tax payable” over the three years.
So, how come Glencore Investment does not make this year’s Top 40? It is not because it showed a $1,000 slither of tax payable. Ironically, it is because it recorded a dramatic rise in taxable income, or profit. The crafty miner appears to have gamed our methodology for evaluating tax dodgers.
We are persevering with the same methodology again this year, for the sake of consistency, but we may change it next year if it is in the public interest to do so.
Evolution of a good corporate taxpayer
The best way to showcase what Glencore has done is to compare it with another mining company which has suddenly experienced a dramatic surge in taxable income. That company is the Australian listed gold producer, Evolution Mining Limited.
Looking at the ATO data (using standard deviation) to find which entities lifted their taxable income the most between 2015-2016 and 2016-17, and in the top 10 are the two miners: Glencore Investments and Evolution Mining.
The ATO data released before Christmas shows Glencore Investment lifting its taxable income from zero in 2015-16 to nearly $1.7 billion in 2016-2017. It earned this on a total income of nearly $15 billion, giving it a four-year margin of 4.16 per cent and taking it off our list (the list cuts out at 0.5 per cent).
In comparison, consider Evolution Mining. Last year, the emerging gold producer had a margin under our 0.5 per cent at 0.2 per cent, but it came in at #82 on our rankings, missing the top 40 because our list is ranked by total income, and its total three-year income of around $2.5 billion was way down the list.
This year’s data shows Evolution Mining also had a big lift in taxable income. Like Glencore Investment, it lifted its taxable income from zero in 2015-16. Evolution Mining had a taxable income of $126,318,242 in 2016-17, (nowhere near Glencore Investment’s $1.7 billion) and it owed the ATO just over $30 million, well above that $1000 the ATO says Glencore investment owes.
How did Evolution Mining pay so much and Glencore Investment so little? We don’t know. Evolution Mining publishes its tax reconciliation. Glencore Investment does not.
It is a frequent refrain of the business lobby that income tax is paid on profits, rather than revenues. Indeed it is. But it is also vital to look at revenue because profit can be manipulated. Profit can be soaked up in IP payments or service agreements offshore. Profit is often diverted to foreign associates by debt-loading, or siphoning off interest on loans from foreign associates.
Public support is vital so this website can continue to fund investigations and publish stories which speak truth to power. Please subscribe for the free newsletter, share stories on social media and, if you can afford it, tip in $5 a month.