Amex pays no Australian tax: investigation

American Express (Amex) has in effect paid no Australian tax on its multi-billion dollar Australian operations, Fairfax Media reported Friday.

A joint investigation by Fairfax Media and University of New South Wales expert of financial reporting irregularities, Jeffrey Knapp, showed Amex's Australian arm, American Express Australia Ltd, received a net tax gain of 3.3 million Australian dollars (2. 5 million U.S. dollars) despite revenues of eight billion Australian dollars (6.198 billion U.S. dollars) in the seven years to 2014.

"It defies belief that over seven years, American Express Australia is making next to nothing in taxable profit," Knapp said. "How can they not make a profit when they are charging 20 percent per year in interest and the cash rate is 2 percent."

According to Fairfax Media, billions of dollars have been transferred from Amex's Australian business to an opaque partnership set up by Amex head office in the United States, where a discount on the transferred receivables balance between the two entities is applied.

These receivables are payments due to be made by Australian customers on their credit cards.

In effect, the Amex International is disadvantaging its Australian subsidiary's profit making ability on the loan balance, therefore reducing its Australian tax liability.

U.S. multinationals operating in Australia, including Google, Facebook, News Corp, Pfizer and Chevron, have come under fire in recent months for avoiding Australian corporate tax payments under similar schemes.

In each case, structures have been designed to lower taxable income through shell companies and off-shore marketing hubs, even to the point of loss, while transferring profits to other countries. Endi