Costello defends Future Fund tax bill
Future Fund chairman Peter Costello has defended the amount of tax the sovereign wealth fund pays, saying it has ‘sovereign immunity’ when it invests overseas.
The government-owned Fund was named along with other Australian companies for using Luxembourg as a base in which to lower global taxes in one of the biggest global tax leaks in history, published last week.
Thousands of leaked documents released by the International Consortium of Investigative Journalists revealed how Australian and multinational companies used accounting firm PricewaterhouseCoopers to strike deals in Luxembourg to shift profits and avoid tax.
The documents showed how the Future Fund had created a complex corporate structure involving interest-free loans and subsidiaries in the Cayman Islands.
The Future Fund is not required to pay Australian tax, but the leaked documents suggest it was using Luxembourg to lower its taxes in foreign countries.
But Mr Costello said the fund was “typically entitled to sovereign immunity when it invests overseas”.
“In the vast bulk of its investments offshore, the Future Fund’s sovereign immunity is recognised, just as Australia recognises the reciprocal rights to sovereign immunity when other sovereigns invest in this country,” he told a conference in Melbourne.
Not all countries offer sovereign immunity. PwC itself noted in a recent paper that the global crackdown on profit shifting would “directly impact” all investors, “including sovereign wealth funds”.
Hundreds of Australian and multinational companies including the Future Fund, AMP, Macquarie, Lend Lease and Goodman Group were named as the beneficiaries of the secret deals in Luxembourg, which reduced some companies tax bill to less than 1 per cent.
The so-called Lux leaks come as world leaders meet in Brisbane for the G20 Leaders Summit, where corporate tax avoidance is high on the agenda.
Treasurer Joe Hockey has talked tough on the issue, calling tax cheats “thieves”. However the government has slashed funding at the Australian Tax Office.
