Nick's Collingwood Bulletin Board Forum Index
 The RulesThe Rules FAQFAQ
   MemberlistMemberlist   UsergroupsUsergroups   CalendarCalendar   SearchSearch 
Log inLog in RegisterRegister
 
More Big Leaners Draining Australia's Revenue Streams

Users browsing this topic:0 Registered, 0 Hidden and 0 Guests
Registered Users: None

Post new topic   Reply to topic    Nick's Collingwood Bulletin Board Forum Index -> Victoria Park Tavern
 
View previous topic :: View next topic  
Author Message
pietillidie 



Joined: 07 Jan 2005


PostPosted: Sun Oct 12, 2014 8:25 pm
Post subject: More Big Leaners Draining Australia's Revenue StreamsReply with quote

Just imagine the real breadth and depth of the rorting of the average person's expectations concerning this type of thing.

Well, if the unemployed don't have to make 40 job applications a week, we job creators deserve something in return!

Michael West, Business Columnist in The Aged wrote:
How UBS leans on its costlier entities

It was just a hunch. Could it possibly be that Australia's top merchant bank was not paying tax?

Surely UBS Australia, the company that raked in more money from our capital markets than any other, was a lifter not a leaner.

This was not some back-street, Gold Coast boiler room, you know, churning two-bit clients through two-bit floats. No, this outfit churned big super funds through $2 billion floats.

Was it really worth spending $100 searching the ASIC database just to find out if it paid its taxes? As it turned out, it was.

According to the latest financial statements for UBS Holdings Pty Ltd, the Swiss banksters received a $17 million rebate from the Australian Tax Office last year. Yes, money back; that's flair for you. Just like News Corp.

Before you descend into couch rage, it is only fair to point out they did pay a spot of tax in the years prior, including $42.5 million in 2012, which was certainly enough to cover pot-hole repair on the mean streets of Woollahra.

The official line from the company, following sheer horror at the insinuation that they pay even one basis point less than they ought, is that UBS pays the statutory 30 per cent corporate tax rate.

But 30 per cent of what? Net or gross? The tax-paying public may never know, because the most glamorous bits of this bank – the mergers and acquisitions and equity capital markets departments – don't seem to file accounts.

This is where UBS probably makes the bulk of its profits, advising on big floats and takeovers. Yet the holding company accounts don't include M&A and ECM. We are told the legal entity for these bits of the business is called "UBS AG Australia Branch" (the accounts of which are apparently with the Australian Prudential Regulation Authority).

"As a domestic branch UBS pays tax in Australia," said a spokesperson. "The accounts for this entity are not public and we would therefore not disclose."

There you have it. We have to take them on trust.

On a cursory look at the accounts of the parent bank in Switzerland, however, you are unlikely to see even mention of the word Australia. The closest you may come is Asia Pacific, which tipped in 16 per cent of UBS AG's 27.7 billion Swiss francs ($33 billion) in operating income last year. Pre-tax profit was CHF3.3 billion and an income tax benefit of CHF110 was recorded. Again, tax back.

UBS Holdings – the half a company with accounts you can request from ASIC – show that a "management fee" of $176 million was paid. We were told this fee went to the mysterious "UBS AG Australia branch". The year before the fee was $187 million.

The other large payment to come out, according to last year's accounts, was the $176 million dividend to the parent in Zurich (last year $24 million, so they may not have got around to funding hospitals and schools in Australia but they surely did their bit for the bankers of Zurich).

That said, the holdings company has parted with $250 million in tax since 2008, which is prima facie a reasonable number, but also reasonably meaningless when at least half the company's profits are hidden. Fee income in the holding company was $347 million last year and interest income $123 million – that covers wealth management and stock-broking. We can only surmise that fees from M&A and ECM – in the hidden accounts – are far higher than this.

So the entity we can see probably houses the bulk of the UBS costs while the entity we can't see houses the bulk of the profits.

SWINGING FROM THE BRANCHES

There is a broader theme at play here. It concerns the relentless shift by multinationals away from running their foreign subsidiaries as traditional "bodies corporate" and towards using them as mere branches.
UBS, with its local board of directors of just two and its profitable businesses hidden in the regional accounts, is a case in point.

As are the oil majors. While the Australian Taxation Office should be applauded for taking on oil giant Chevron in the Federal Court for profit shifting – via a raft of inter-company loans and payments – it perhaps should be challenging its legal structure.

It could claim the Australian subsidiaries of Chevron are no more than fronts for Chevron Inc because Chevron Inc is orchestrating an arrangement (costly loans) that is detrimental to the local companies as stand-alone entities. Chevron Inc clearly won't allow the nominated directors of local companies to go to the market for funds and it can easily be argued that Chevron Inc people are, in effect, shadow directors who are beholden to act in the best interests of the foreign parent.

Unfortunately, thanks to the CLERP amendments to Corporations Law, Chevron directors may not need to act in the best interest of the local entity, although they still have a duty to act honestly.

It will be a good thing if local directors have to disclose whether their governance arrangements are in conflict with Australia's corporations laws. In a legal sense it now seems to be the case – and not just with Chevron but with Shell Australia and a host of multinationals – that the local subsidiaries are really acting as agents for the parent.

The other thing that will cut down tax avoidance instantaneously is for regulators to insist that all large companies file full "general purpose" financial statements, disclosing all related party transactions. Yes, even those slick banksters high in their Chifley Square eyrie.

http://www.theage.com.au/business/how-ubs-leans-on-its-costlier-entities-20141010-113xbv.html

_________________
In the end the rain comes down, washes clean the streets of a blue sky town.
Help Nick's: http://www.magpies.net/nick/bb/fundraising.htm
Back to top  
View user's profile Send private message  
Mugwump 



Joined: 28 Jul 2007
Location: Between London and Melbourne

PostPosted: Sun Oct 12, 2014 9:43 pm
Post subject: Reply with quote

I read this twice, and I still don't understand it. If UBS AG Australia branch operates in Oz and derives its income from M&A etc here, and it files its accounts with APRA (which I assume is a governmental regulatory body), then why would those activities -which are presumably visible to the ATO - not be subject to tax, if they were profitable ?

On the broader point, it does seem clear that national governments all over the world are struggling to ensure that multinational corporations are paying income tax, and the current system does not work well.

Not being an expert in that field, I have limited insight into the practicalities of how to fix this, though some kind of international convention between the major OECD economies would probably be desirable - perhaps something to the effect that companies of size X which operate in more than one OECD country should pay tax to an OECD collection agency at some minimum rate, regardless of headline profitability, with an allocation key so the proceeds were distributed between member countries. Given the tendency of profit figures to shape-shift, the tax could be levied on some percentage of revenues (or global wages in the financial sector). It would cause anomalies, but large entities should be able to absorb those, and it might create clarity and stability all round. If it put half a million tax accountants and lawyers and tax inspectors out of business globally, that too might be something in its favour.

_________________
Two more flags before I die!
Back to top  
View user's profile Send private message  
pietillidie 



Joined: 07 Jan 2005


PostPosted: Sun Oct 12, 2014 9:55 pm
Post subject: Reply with quote

^He's pointing to the intransparency and lack of accountability, particularly when the ostensible numbers here and abroad don't align with reasonable expectations, or we're so in the dark we don't even know what reasonable expectations are.

He then goes on to talk about the Chevron case to show why accountability is needed, and furthermore why the ATO's eyes alone are insufficient: The law itself is often an ass under regulatory capture.

As with national security, regulation is surely always answerable to transparency, not the other way around. (See the WikiLeaked Hilary Clinton comment in the other thread as a far more serious example of this).

_________________
In the end the rain comes down, washes clean the streets of a blue sky town.
Help Nick's: http://www.magpies.net/nick/bb/fundraising.htm
Back to top  
View user's profile Send private message  
pietillidie 



Joined: 07 Jan 2005


PostPosted: Sun Oct 12, 2014 10:04 pm
Post subject: Reply with quote

I'm actually too busy to labor over these topics now, but I just wanted to demonstrate to people just how hopelessly partial what is brought to their attention is.

As I always tell my good friend David, I don't want to be a martyr for any cause, and nor should I have to. But I'm not going to swallow nonsense when my snapshot is so tiny, and as soon as I spend five minutes digging into anything the same dirty finger prints of unaccountable power can be found.

I just wish a few others would share the bloody load; we all have our own financial needs and reputations we risk when we ask serious questions and upset the apple cart; it's not fair that we put that burden on a small group of "radicals" and then ostracise them.

Have the guts to share the burden of complexity, folks, even if it interrupts your self-motivation program and money-making hours.

_________________
In the end the rain comes down, washes clean the streets of a blue sky town.
Help Nick's: http://www.magpies.net/nick/bb/fundraising.htm
Back to top  
View user's profile Send private message  
Mugwump 



Joined: 28 Jul 2007
Location: Between London and Melbourne

PostPosted: Sun Oct 12, 2014 10:13 pm
Post subject: Reply with quote

pietillidie wrote:
^He's pointing to the intransparency and lack of accountability, particularly when the ostensible numbers here and abroad don't align with reasonable expectations, or we're so in the dark we don't even know what reasonable expectations are.

He then goes on to talk about the Chevron case to show why accountability is needed, and furthermore why the ATO's eyes alone are insufficient: The law itself is often an ass under regulatory capture.

As with national security, regulation is surely always answerable to transparency, not the other way around. (See the WikiLeaked Hilary Clinton comment in the other thread as a far more serious example of this).


Yes, but is he arguing regulatory capture or corruption in the UBS case ? I just don't understand why accounts filed with APRA would not be filed with ASIC and available to the ATO, so presumably they're paying the right tax or they're not - and the directors of the Australian affiliate could be prosecuted if not. The fact that privately-held companies do not file public accounts is a pretty long-standing one, but I doubt that it's proof of " leaning" through not paying taxes as required by law. I guess you coild force public companies to file public accounts for every affiliate in every jurisdiction where they operate. I doubt it'd change much. The problem is that the legal framework around corporation tax no longer works well.

_________________
Two more flags before I die!
Back to top  
View user's profile Send private message  
pietillidie 



Joined: 07 Jan 2005


PostPosted: Sun Oct 12, 2014 10:49 pm
Post subject: Reply with quote

Mugwump wrote:
pietillidie wrote:
^He's pointing to the intransparency and lack of accountability, particularly when the ostensible numbers here and abroad don't align with reasonable expectations, or we're so in the dark we don't even know what reasonable expectations are.

He then goes on to talk about the Chevron case to show why accountability is needed, and furthermore why the ATO's eyes alone are insufficient: The law itself is often an ass under regulatory capture.

As with national security, regulation is surely always answerable to transparency, not the other way around. (See the WikiLeaked Hilary Clinton comment in the other thread as a far more serious example of this).


Yes, but is he arguing regulatory capture or corruption in the UBS case ? I just don't understand why accounts filed with APRA would not be filed with ASIC and available to the ATO, so presumably they're paying the right tax or they're not - and the directors of the Australian affiliate could be prosecuted if not. The fact that privately-held companies do not file public accounts is a pretty long-standing one, but I doubt that it's proof of " leaning" through not paying taxes as required by law. I guess you coild force public companies to file public accounts for every affiliate in every jurisdiction where they operate. I doubt it'd change much. The problem is that the legal framework around corporation tax no longer works well.

To respond to one last thing before getting into my work full on (yeah, right, you say!), I didn't think he was arguing anything but intransparency. I took his point to be that the questions one could ask about UBS are reasonable and the doubts self-induced by a purposeful, albeit legal, intransparency.

In the light of the prevalence of regulatory capture, as illustrated by the Chevron case, and the general international problem of jurisdiction gaming (as you pointed out), aggressive questioning of specific entities shielding behind these anomalies and indeed lobbying feverishly to maintain them is not out of order.

_________________
In the end the rain comes down, washes clean the streets of a blue sky town.
Help Nick's: http://www.magpies.net/nick/bb/fundraising.htm
Back to top  
View user's profile Send private message  
Display posts from previous:   
Post new topic   Reply to topic    Nick's Collingwood Bulletin Board Forum Index -> Victoria Park Tavern All times are GMT + 11 Hours

Page 1 of 1   

 
Jump to:  
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum
You cannot attach files in this forum
You cannot download files in this forum



Privacy Policy

Powered by phpBB © 2001, 2005 phpBB Group