Wayne Swan (Lilley, Australian Labor Party) Share this | Link to this | Hansard source

In parliament two weeks ago I spoke about the stench of tax evasion through the use of tax havens and tax shields such as those used in Singapore. The use of these tax shields by so-called respectable Australian companies is demolishing Australia's corporate tax base. In particular, I highlighted the actions of BHP, who are part of a wider scourge that has seen billions of dollars in revenue smuggled out of Australia in recent years. Last week BHP wrote to me in misleading terms, claiming to be a global leader in tax transparency. That letter hides more than it reveals: BHP's aggressive use of transfer pricing and profit shifting through its Singapore tax shield and its continuing denial that its marketing hub was created for tax purposes are both shameful deceptions. BHP says it has been transparent, but we can see right through it. It is time for BHP to be really transparent about its tax and royalty liabilities and to close down the use of its marketing hub in Singapore as a tax shield.

Between 2006 and 2014, BHP sold Australian minerals to its Singapore marketing hub to avoid paying taxes on profits of $5.7 billion. While BHP later repaid $1 billion in top-up taxes, these taxes only applied to 58 per cent of the profit generated through the Singapore marketing hub. A full 42 per cent of the profit was untaxed in Australia. Nor was it taxed by the government in the UK, where BHP is co-owned. The directors of BHP Australia and BHP UK are the same people. This tax shield exists solely to smuggle profits out of Australia. There is no question that BHP has been gaming the system and is in serious dispute with the tax office over its unpaid taxes. BHP cannot claim to be transparent given its failure to clearly outline numerous back payments as a result of tax office audits, as well as those amounts currently in dispute with the tax office and the Australian states.

BHP must make a full public declaration of these payments and the reason behind the repayments it was forced to make to the tax office in 2006. It should also publicly outline what issues remain unresolved and the provisions that it has made for repayment. Media reports indicate that BHP has also used the Singapore tax shield to evade royalty payments of up to $300 million to the Queensland government. This problem extends to other jurisdictions. When global companies like BHP behave this way they compromise the integrity of our social contract and give smaller taxpayers a green light to go about minimising or evading tax. I call on the corporate leadership of BHP to embark on ethical and transparent—(Time expired)