A decade without taxes?

After reporting a 7% rise in revenues yesterday for the first half of 2013, Sydney Airport (ASX: SYD) has come under scrutiny today after it was highlighted by The Sydney Morning Herald that the corporation had not paid tax in a decade.

Since the company was privatized by the government, it has structured its affairs in order to avoid tax liability. Perhaps even more shockingly, a tax benefit was also won by the group, which offset a corporate tax charge of $425,000 in June 2006.

Yesterday’s interim report revealed a 6% increase in earnings before interest, tax, depreciation and amortization (EBITDA), a 5.3% increase in retail revenues and a whopping 11.5% increase in car park and ground transport revenues.

News that the group has not paid corporate tax in such a long period of time simply adds fuel to the fire of governments around the world, which have argued that a number of the world’s largest corporations are not paying their fair share. Google (NASDAQ: GOOG) and Apple (NASDAQ: AAPL) have both been mentioned as companies who have avoided their responsibilities to pay taxes – although they have managed to do it via perfectly legal methods.

Much like Auckland International Airport (ASX: AIA), Sydney Airport is a monopolistic business that offers essential services and, as such, can afford to carry enormous amounts of debt. As the article further highlighted, the corporation currently holds a debt of $8.5 billion, which it could afford to pay off – however, if it chose to do so, an underlying profit would be recognised which would bring with it the responsibility to pay tax.

Foolish takeaway

There has been talk of a second airport being built in Sydney, which could act as a hindrance against Sydney Airport’s position or perhaps boost its position, should it choose to use its right of first refusal to build, own and operate a second airport in the area.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

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