RR Phantom
Location : Wasted Space Job/hobbies : Cayman Islands Actuary
| Subject: Extortionist IRS attempts to shake down JAMES HARDIE INDUSTRIES Mon Jun 23, 2008 6:35 pm | |
| JAMES HARDIE INDUSTRIES' attempt to minimise its tax by relocating to Holland appears to have backfired spectacularly, with the group announcing it faced a fresh $US49 million ($51 million) demand from the US tax office.
Barely a week since it warned it faced a $240.3 million bill from the Australian Taxation Office in relation to its move to Holland in 2001, the company said yesterday it had been told by America's Internal Revenue Service (IRS) it was "not in compliance" with a tax treaty between the US and Holland in 2006 and 2007.
It is believed the IRS argues Hardie breached the treaty by not making its key strategic, financing and policy decisions in Holland.
Hardie will fight the ruling. "We will contest the IRS findings through the continuing audit process and, if necessary, we will exercise our rights to an impartial hearing before the appeals division of the IRS to resolve this matter," its chief financial officer, Russell Chenu, said in a statement to the ASX. "At that stage, if we are not satisfied with the settlement offer from the appeals division, we would consider the option of litigating our position in the US Tax Court."
Hardie shares, already battered by the sharp downturn in US housing, fell 17c to $4.55 yesterday. At one point, they touched $4.45, their lowest level since late 2001.
The company warned that if it lost its case against the IRS, it could be forced to pay a primary tax bill of $US37 million, penalties of $US7 million and interest of around $US5 million.
Hardie said the primary tax related to withholding tax of 30 per cent on the payments and dividends transferred from its US operations to its Dutch companies in 2006 and 2007. Hardie said it would "post a bond" in relation to the IRS claim, which it said would stop interest being accrued in relation to the tax bill.
The company has already paid half of an earlier $378 million tax bill from the Tax Office which it still plans to fight in the Federal Court later this year. That claim relates to a 1999 corporate restructure the company undertook.
But the latest claim all but makes a mockery of the company's assurances to shareholders it would save tens of millions of dollars in tax by moving to Holland.
In 2001 Hardie's then chairman Alan McGregor told shareholders the company would save $54 million in the first two years it was based in Holland, followed by $16 million a year over the long term.
But even excluding the claims from the Tax Office and IRS, Hardie paid a corporate tax rate of 38 per cent, according to its most recent accounts, despite its Holland move. This compares to the 25-30 per cent rate it originally said it would pay being domiciled in Europe.
The company, which has the bulk of its operations in the US, has consistently denied the move to Holland was aimed at helping it avoid its obligations to compensate victims of its former asbestos products.
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CovOps
Location : Ether-Sphere Job/hobbies : Irrationality Exterminator Humor : Über Serious
| Subject: Re: Extortionist IRS attempts to shake down JAMES HARDIE INDUSTRIES Mon Jun 23, 2008 9:12 pm | |
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