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Millions lost as multinationals dodge tax

Google Headquarters, Photo courtesy: Robert Scoble/Flickr

 

By Charlotte Mutoro

Multinational companies like Google that do business in Australia are coming under fire for the way that they calculate income tax; paying very low or no tax as a result.

Hong Kong based companies Cheung Kong Infrastructure Limited (CKI) and Power Asset Holdings hold major stakes in electricity distribution networks in Victoria and South Australia. They were accused by the Australian Tax Office last year of failing to pay more than $750 million in taxes according to The Australian Financial Review.The tax owed dates back to 1999.

“Australia is open for business, and we welcome foreign investment when it is not contrary to the national interest,” treasurer Joe Hockey said.

Yet in Victoria, where the state’s energy infrastructure has been having a major overhaul the tax payer has been paying out.

‘In Victoria, they have upgraded their whole system using taxpayer’s money” said Sharka, an independent researcher from Melbourne.

“I would love to have a business which makes the tax payers pay for it’ she says. ‘$2.4 billion from tax payers’ money has been invested into upgrading the system for this Hong Kong Company….. It’s absurd”

CKI’s market capitalisation was HK$120 billion (around A$16 billion) by the end of March this year, and they had a 23.07% the company shareholding in SA Power Networks in South Australia, as well as Powercor Australia Limited, and CitiPower I Pty Ltd in Victoria.

Spark Infrastructure Holdings (SIH) has been involved in a tax dispute in regards to its business Victoria Power Networks, and according to the Financial Times agreed to make a part payment of $12.5 million at the end of 2013 against its 2009 tax assessment. SIH also lists SA Power Networks, Citipower and Powercor as assets.

Treasurer Joe Hockey’s deal brokered with the State governments last November offers financial incentives to privatise the states’ infrastructure to provide economic stimulus.

The private investors will be required to pay income tax to the federal government, who would then pass it on to the respective states as a tax equivalent incentive payment.

STM Editor
Journalist and teacher
http://sydneytafemedia.com.au

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