Thanks to Singapore’s low tax rates and other tax incentives aimed at luring businesses, companies sent $55.1 billion to the island nation in 2013. Photo: Reuters Australian companies sent more than $64 billion to related parties in Singapore and Switzerland, where they pay little or no tax at all.

The Taxation Statistics 2012-13 gives an update on the amount of money companies are sending through Singapore and other overseas hubs.

Thanks to Singapore’s low tax rates and other tax incentives aimed at luring businesses, companies sent $55.1 billion to related parties in the island nation in 2013. This is up from almost $40 billion the year before.

The revenue incoming from their Singapore associates also rose from about $11 billion to $45.3 billion.

This confirms earlier reports by Fairfax Media that Australian companies have more than $100 billion worth of transactions with related parties in Singapore.

Earlier this year the ATO provided a submission to the tax inquiry that detailed money going out and flowing in. Its submission found that more than half of Australia’s cross-border trade, totalling $600 billion, was transactions between related entities. That is, companies in the same corporate group.

Companies such as Google, Apple, Microsoft, BHP Billiton and Rio Tinto have all admitted in recent hearings as part of the Senate inquiry into corporate tax avoidance that they are under audit by the ATO for their use of Singapore “marketing” and “service” hubs, where they route hundreds of millions of dollars of income.

The companies say the hubs are a legitimate regional place of business that they use to enhance their products and services. But  Tax Commissioner Chris Jordan has disputed the amount of income that is being channelled through these hubs. He wants to get more of the tax paid on profits in Australia.

The Taxation Statistics show after Singapore, the next top destination where money flowed out in 2013 was the United States, where $27 billion worth of funds went,  followed by Japan ($19.2 billion), Britain ($13.8 billion), Germany ($11.1 billion) and Switzerland ($9.1 billion).

This is a change from 2012 when the top nations where money was sent were Singapore, Japan, Britain, United States, Germany, and Ireland.

In terms of revenue multinationals received from overseas associates in 2013, these were Singapore ($45.3 billion), United States ($14.3 billion), Japan ($10.4 billion), Britain ($9.1 billion), Switzerland ($6.5 billion), New Zealand ($5.4 billion).

The ATO refers to this shifting of money abroad between related entities as “international related-party dealings”. In 2012-13 the value totalled $388.4 billion (includes incoming and outgoing flows).

The ATO submission to the corporate tax avoidance inquiry said the value of these related-party dealings was “highly concentrated within the largest 30 corporate entities”, which account for about 50 per cent of the total.

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