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Aldi and tax transparency (Read 204 times)
Wolseley
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Aldi and tax transparency
Aug 17th, 2016 at 12:10am
 
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Coles has urged its German rival Aldi to sign up to a new tax transparency code that will lead to more big businesses, particularly multinationals, releasing detailed information about the tax they pay.

Aldi has yet to sign up to the Voluntary Tax Transparency Code, which targets more than 1500 businesses with turnover of $100 million and follows public anger over large multinationals engaging in aggressive tax avoidance.

We break down the key statistics of six products from the supermarkets shelves.

The government is "encouraging" all companies to adopt the code this financial year, and will make it mandatory if too few companies come forward.

Wesfarmers, the owner of Coles and other retail chains such as Bunnings and Officeworks, has signed up. Wesfarmers chairman Michael Chaney told Fairfax Media: "I would encourage all supermarket operators to do so."

Aldi has an unusual corporate structure that makes its financial results less transparent to the public and competitors.

Australia's biggest retailer Woolworths said it "intends on becoming a signatory to the taxation transparency code".

"It is worth noting that as a large Australian listed company that conducts the vast majority of its business within Australia, our tax arrangements are already transparent through our reporting and publicly available tax and ASIC [Australian Securities and Investments Commission] documents," a Woolworths spokeswoman said.

With an estimated 10 per cent market share of Australia's $90 billion-odd grocery market, Aldi is one of the country's biggest retailers. But, unusually, it is structured as a limited partnership.

​This means Aldi is not required to be audited nor to disclose its accounts to the corporate regulator, ASIC (if it did, its accounts would be available to the public and competitors). Instead, limited partnerships are registered with the states and territories.

Wesfarmers chairman Michael Chaney urges all supermarkets to join the tax disclosure code.

A spokeswoman for the chain added that it "currently complies with all its statutory tax reporting obligations".

This is not the first time tensions have flared about Aldi's transparency and tax record.

Wesfarmers chief executive Richard Goyder last year said "someone should go and have a good look at how much tax Aldi pays in this country because I suspect they're very profitable". He also said Aldi should be "paying corporate tax in Australia and they should be very transparent".

Aldi Australasia chief executive Tom Daunt responded, in a submission to the Senate inquiry into tax avoidance, that Aldi "does not engage in the inappropriate pricing of international related party transactions for the purposes of artificially reducing taxable profits in Australia". He added that Aldi had a "very open and positive working relationship" with the Australian Taxation Office.

The Voluntary Tax Transparency Code was created with the input of business by the Department of Taxation. Other signatories include major banks ANZ, NAB and Commonwealth Bank, the big two miners BHP Billiton and Rio Tinto, property business Mirvac and investment firm AMP.

Paul Drum, head of policy at accounting body CPA Australia, said: "The list is growing of those that recognise the implications of a perception, one way or another, of not participating. That kind of corporate peer group pressure will lead to greater transparency and less aggressive tax planning."


http://www.smh.com.au/business/retail/wesfarmers-urges-aldi-to-sign-tax-code-in-...
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bogarde73
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Re: Aldi and tax transparency
Reply #1 - Aug 18th, 2016 at 7:23am
 
The limited partnership business structure which Aldi chooses to use is an old model and perfectly legal. My guess is they choose that because it is a much cheaper structure to run than a public company structure today with all the red tape & disclosure rules that apply.

As a partmership they are not obliged to publish accounts or their tax details any more than a private citizen is, but they are still bound by all other laws such as cover employment, competition, advertising etc. And like any sole trader, partnership or company operating here they must account to the ATO.


What other objections do you have about Aldi.
Do you object to them being foreign owned? Or able to undercut the big2?
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Wolseley
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Re: Aldi and tax transparency
Reply #2 - Aug 26th, 2016 at 10:01pm
 
bogarde73 wrote on Aug 18th, 2016 at 7:23am:
The limited partnership business structure which Aldi chooses to use is an old model and perfectly legal.

Nobody has ever said that it isn’t, as far as I am aware.  It has been around since the 1890s, although these days it seems to mainly be used for venture capital enterprises.  It is a rather odd choice for a national retailer though, given that it is State and not Commonwealth legislation.

bogarde73 wrote on Aug 18th, 2016 at 7:23am:
My guess is they choose that because it is a much cheaper structure to run than a public company structure today with all the red tape & disclosure rules that apply.

There would be no point in incorporating as a Public Company if you want to restrict the shareholders and directors to just one or two individuals, and do not want to raise money by issuing shares.  A more logical option would be to incorporate as a Proprietary Limited Company, but that would mean that they would either have to have their accounts audited, or lodge financial documentation with ASIC, although the requirements for such companies are much less stringent than they are for Public Companies.  The fact that a Limited Partnership does not have to publish its financial results is probably the real reason that they opted for this rather unusual structure.  It helps them hide how much wealth they take out of Australia and send to Germany.

bogarde73 wrote on Aug 18th, 2016 at 7:23am:
As a partmership they are not obliged to publish accounts or their tax details any more than a private citizen is, but they are still bound by all other laws such as cover employment, competition, advertising etc. And like any sole trader, partnership or company operating here they must account to the ATO.

The documents lodged with the ATO would show what the expenses and profits are, amongst other things, but would the documents lodged with the ATO detail how the expenses are calculated?  For all we know, there could be millions being siphoned off overseas, without tax being paid, as licensing fees that are included in these expenses.

bogarde73 wrote on Aug 18th, 2016 at 7:23am:
Do you object to them being foreign owned? Or able to undercut the big2?

I do prefer to do my shopping at a shop that is Australian owned.  Do you really want to see Australia’s wealth go overseas or would you rather shop where you would see most of the profits stay here in Australia?  I would rather buy from an Australian-owned company, as doing so is more likely to ensure a future for our grandchildren.

I do occasionally shop at Aldi, but I usually go elsewhere for most of what I buy (you can’t get everything you want in Aldi anyway).  Some of their home brand products are good, some of them are not.  It’s a bit of a lottery.

I do dislike their dressing up of generic home brand type goods as something resembling brand names, aping competitor’s logos and packaging in a way that must come close to infringing copyright.  I do not like their insistence on paying full price for damaged goods, and I do not like the way they publicly state a pricing policy that they do not adhere to.  I also can’t believe the savings that they claim can be made from shopping there - I recall one advertisement about a year ago that claimed someone was saving an amount on their weekly shopping that was more than half of what most people would spend in total each week.
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