TAX HAVENS like Bermuda, Hong Kong, Singapore together, it would seem, are a boil on the face of the global tax system.
IS it the case that we AUSTRALIANS also pay the price of environmental damage with much of this packaging ending up in either landfill or recycling piles?
Company of Anthony Pratt, Australia’s richest man, pays virtually no tax
Exclusive: despite reaping profits of more than $340m since 2013, a Pratt holding company has paid little tax
Tue 29 Oct 2019
A key company in the business empire of Australia’s richest man, Anthony Pratt, has paid very little tax since 2013 despite reaping profits totalling more than $340m over the same period, corporate and tax records show.
At the opening of a Pratt-owned factory in the US last month with Donald Trump, Scott Morrison described Pratt as the “Don Bradman of job creation”. Earlier this year, beforethe federal election, Pratt hosted a $5,000-a-head fundraiser for then opposition leader Bill Shorten at his family’s historic Melbourne mansion, Raheen.
Katharine Murphy in Wapakoneta, Ohio
Pratt Consolidated Holdings, which is ultimately owned by a Pratt family trust, collects dividends from other companies in the group and passes them on to the trust.
Pratt Consolidated Holdings’ most recent annual report, from 2018, does not disclose which companies it owns in Pratt’s global empire, which includes the Visy packaging company in Australia, a similar business called Pratt Industries in the US and a recycling business in Europe.
Its accounts, filed with the Australian Securities and Investments Commission, show that between 2013 and 2018 it paid more than $295m to the family trust, and accumulated a net tax benefit of about $2,300.
Data provided by the federal government under tax transparency laws shows that between 2014 and 2017 the company accumulated a taxable income of $327m but paid tax in only one of the years in question, 2017, when it paid $18.85m to the ATO.
This equates to an effective tax rate of 5.8%, or less than a fifth of the headline corporate tax rate of 30%.
Accounting figures and tax data frequently do not match because they are calculated differently.
Visy and Pratt’s US chief executive, Brian McPheely, did not respond to Guardian Australia’s inquiries about the tax paid by Pratt Consolidated Holdings, the difference between the figures in company accounts and government data and the structure of the group.
However, the company appears to be drawing on tax losses run up from unprofitable activities in the past – something it would be completely within its legal rights to do.
Jason Ward, the principal analyst at the trade union-backed Centre for International Corporate Tax Accountability and Research, said it was “disturbing that one of the largest companies in Australia – with global operations and owned by Australia’s richest man – appears to pay virtually no tax”.
He said it was “shocking” that the company did not disclose where the dividends it received came from.
Current tax rules do not require entities like Pratt Consolidated Holdings to disclose where dividends come from within those groups.
“The lack of transparency makes it impossible to know the full picture.
“Australia does better than most countries, but we are still losing billions in revenue, from those who can most afford to pay, that should be funding our schools, hospitals, aged care, infrastructure and other essential public services.”
The Pratt family’s business empire also includes companies in tax havens Bermuda, Hong Kong and Singapore.
Guardian Australia’s questions about the role of Pratt Holdings (Bermuda) Ltd, which Bermudian records show is run by directors including Pratt and his partner, Claudine Revere, were also not answered.
However, corporate records in the UK show a Hong Kong company called Allpak Trading owns the European recycling business, Visy Recycling Europe.
Allpak is in turn owned by one of the Australian companies in the Visy group, Hong Kong company records show.
Visy also has a trading arm in another tax haven, Singapore, that “is innovating supply chains by sourcing new cutting edge products saving our customers time, money and working capital”, according to the company’s website.
*Neither major political party would comment on Pratt’s tax arrangements, despite a campaign from both to tackle tax avoidance.
*“The government doesn’t speculate on the detailed tax affairs of any particular taxpayer,” a spokeswoman for the prime minister said.
“There are a number of legitimate reasons why, in any given year, a company may pay tax at a rate below the headline corporate tax rate.
“The government has however taken significant action to ensure that where companies should be paying tax, that they do pay that tax. Since 1 July 2016, the ATO has raised almost $14bn in tax liabilities against large public groups, multinational corporations, wealthy individuals and associated groups. Of this almost $9bn in liabilities was raised from multinationals and large companies.”
In responding to questions from Guardian Australia, Labor’s Andrew Leigh focused on the more general issue of tax loopholes, which he said the Morrison government had not tackled.
“The Liberals refuse to close tax loopholes that are seeing billions of tax dollars flowing out of Australia’s tax system,” he said.
“Tax havens like Bermuda are a boil on the face of the global tax system. Yet the Morrison government defends tax havens, and refuses to get tough on multinational profit-shifting.
“Right now, two dollars in five of multinational profits pass through tax havens like Bermuda. Firms that channel profits into tax havens are cheating the Australian taxpayer.”