Glencore to cut down on tax-haven subsidiaries as scrutiny grows

Glencore plans to reduce the number of subsidiaries based in so-called tax havens as the commodities giant seeks to improve transparency.

Glencore has come under criticism in recent years for its use of companies located in low-tax jurisdictions, with public officials and pressure groups accusing the company of transferring profits out of countries it operates in without paying appropriate levies to national governments.

In a report on Monday, Glencore denied employing such tactics, but said it's reviewing all entities located in tax-haven jurisdictions. It's planning to consolidate or eliminate as many as possible, or register for tax residence in other non-haven jurisdictions where the units can't be shut down. It also published a group tax policy built around the objective of being viewed as a "good corporate fiscal citizen."

"We do from time to time make use of companies incorporated in what would be termed tax neutral or tax haven jurisdictions," Glencore said in the report. "Where that occurs, it is always for a specific purpose and the companies used can be referred to as special purpose vehicles."

Glencore is based in Baar, in the canton of Zug, Switzerland, a jurisdiction known for its low personal and corporate tax rates.

The company's overall payments to governments rose to $5.7bn (about R80.6bn) in 2018, up from about $4.5bn (about R63.6bn)  in the prior year, it said in the report.

Other significant disclosures included:

$1.2bn (about R17bn) in payments to national oil companies in countries participating in the Extractive Industries Transparency Initiative – a voluntary program aimed at rooting out corruption whose members include Nigeria, Norway, Chad, Ghana and Cameroon.

Glencore paid an additional $14.3bn (about R202bn) in oil-related payments to governments of countries not participating in the EITI.

That compares with $2.99bn (about R42bn) in EITI country oil payments by rival oil trader Gunvor Group the same year.

Payments for oil originating in South Sudan totaling $425.7m (about R6bn), for 6.4 million barrels of oil.

Total tax payments of $1.06bn (about R15bn) paid to the Democratic Republic of Congo, up from $408m (about R5.8bn) in 2017.

An adjusted effective tax rate of 30.9% across its global operations.

ZAR/USD
17.34
(-0.18)
ZAR/GBP
22.83
(-0.46)
ZAR/EUR
20.61
(-0.25)
ZAR/AUD
12.48
(-0.12)
ZAR/JPY
0.16
(-0.24)
Gold
2050.60
(+0.77)
Silver
27.64
(+3.01)
Platinum
982.00
(+1.94)
Brent Crude
45.33
(+1.67)
Palladium
2189.18
(+1.10)
All Share
57629.36
(+2.45)
Top 40
53279.30
(+2.56)
Financial 15
9928.97
(+0.51)
Industrial 25
76162.43
(+1.63)
Resource 10
59790.27
(+4.30)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 885 votes
It depends on how the funds are used.
74% - 5839 votes
No. We should have gotten the loan elsewhere.
15% - 1173 votes
Vote