The controversy regarding tax havens and offshore bank accounts occurs around the world, and even those working in tax offices are not free from blame. Recently, contractors at the Australian Taxation Office have faced accusations of being connected with tax havens. A new report indicates that some of the multinational corporations responsible for providing call center staff and labor either follow questionable tax practices or are connected to tax havens.
The report was published in early December 2019 by the Centre for International Corporate Tax Accountability and Research, Cictar, and led by Jason Ward. This report raised questions about the tax practices associated with some specific firms, including Japan-based Outsourcing Inc., UK-based Serco, and Texas-based Stellar. Each of those firms repeatedly earned lucrative contracts with the Australian Taxation Office. In most cases, these companies either help run the call centers of the agencies or provide outsourced labor.
Just in 2017, Stellar won a $51.25 million contract for providing labor to the Australian Taxation Office. It also has other large contracts in Australia, including for Centrelink’s call center and for magistrate courts in Perth and Victoria. Stellar has its headquarters in Texas with corporate structure linked to Nevada, which is known for being tax-friendly. Serco is known for running immigration detention centers and prisons and worked with the Australian Taxation Office’s call centers as well as providing labor.
The report from Cictar goes into detail regarding the shady taxation practices of each firm. It connects Stellar to tax havens. As far as Outsourcing Inc., the report indicates that the Japanese company fully lacks transparency on some questionable transactions and uses a complex corporate structure. Serco is criticized for repeatedly using “creative account” to reduce tax obligations within Australia.
Bankruptcy filings from Stellar’s past connected the company’s call center business in the UK to the tax haven of the British Virgin Islands. The report also includes specific figures that indicate how little Stellar paid in taxes. The total income was $132.5 million in Australia, with a taxable income of just $6.6 million, leading to a tax bill of only $2 million. In 2017, Guardian Australia indicated that even Appleby, the firm known for its major role in the Paradise Papers, was hesitant to work with Serco. There are similar details in the report about each of the firms.
Unsurprisingly, all three of the firms accused denied the accusations. Serco and Stellar each issued strongly worded statements while Outsourcing Inc. explained that it pays appropriate Australian taxes and does not have an unusual corporate structure.
The public’s reaction to the report is also unsurprising as they are not happy. Australian people expect to receive transparency from the Australian Taxation Office. They are also not fond of privatization and outsourcing, particularly in the case of companies with questionable tax practices.
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