Australian miners have been accused of not paying enough tax in Africa

Oxfam has issued a report today accusing Australian mining companies operating in Africa of tax avoidance practices.

The organisation estimated the impact on local governments could be up to $1.1 billion by Australian companies alone and has cost them $289 million in tax revenue.

Oxfam has called on companies to publish more information about taxes they pay and the Australian government to become more transparent.

While not accusing any companies of illegal tax evasion, it named three companies who it believes could have paid $149 million more across their projects in Ghana, DR Congo and Sierra Leone.

This could have paid for 8,000 nurses in Ghana, totally respond to the 2018 ebola outbreak 1.5 times over and cover the health of 67,000 Sierra Leonean women and children.

“We understand that these (companies’) mines are privy to special or secretive tax arrangements and that each company has subsidiaries located in tax havens, which raises serious questions about their tax practices,” Oxfam said.

“Since each mine began operating they all appear to have exploited some form of tax concession or loophole.”

It noted two operators claimed millions of dollars of royalty offsets. Therefore their tax bills were less than 1 per cent of revenue between 2009 and 2015 when corporate tax rates have been at least 30 per cent.

Oxfam wants…

Oxfam called on companies to:

Be proactively transparent by annually publishing tax data on a country by country basis including all subsidiaries
Pay a fair share of tax by aligning tax payments with actual economic activity.

Oxfam then called on the government to:

Require public country-by-country reporting of revenues, profits and tax paid.
Introduce legislation requiring public project by project reporting in Australia.

It also suggested the government should implement the Extractive Industries Transparency Initiative (EITI). This initiative aims to increase transparency around beneficial ownership and company structures among other things.

As for the host countries’ governments it said they should:

Invest in improving the governance of extractive revenues
Commit to forging durable extractives contracts.

Oxfam did note what many mining industry advocates would claim – mining isn’t improving citizens’ lives because the government doesn’t distribute their taxes.

“Developing country governments like those in Africa generally perform poorly in terms of budget transparency,” Oxfam said.

It thus implored them to “spend extractive revenues in a way that ensures economic growth benefits both current and future generations”.

The companies respond

Not all mining companies were blamed. Oxfam gave BHP and Rio Tinto credit for transparency as well as one of the miners named in the report, Perseus Mining.

But Perseus told the Stockhead the accusation it could have paid $57 million more tax was false.

“Perseus pays all taxes that are legislated as and when they fall due,” declared a company spokesperson.

“Basic tax accounting requires that the amount of tax payable by an entity is calculated based on taxable income, not turnover.”

“In simple terms, taxable income is calculated by deducting allowable expenses including operating costs and depreciation of capital investment from revenue.

“To date, as Perseus has not earned any taxable income from its Edikan Mine, and therefore no income tax has been payable or paid to the Ghanaian tax authorities.”

It also noted it paid a royalty worth 5 per cent of revenue to the Ghananian government and in 2018 this was US$19 million.