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Westfield’s Jersey tax haven

Westfield Group (ASX: WDC) has become the latest multinational corporation under fire for paying minimal taxes, after a report released to the ABC revealed that the group’s primary UK company has paid only a small portion of its revenue in tax.

Corporations around the world, including Apple (Nasdaq: AAPL) and Google (Nasdaq: GOOG), have been accused of not paying enough national taxes and letting the tax burden lie on individuals and smaller companies as a result.

Now, Westfield has “put in place what they would call a tax-efficient structure” with a complex design, whereby 54 of the group’s subsidiary companies are registered in the low-tax haven of Jersey in the English Channel.

One of the greatest benefits of employing this method was explained by Richard Murphy, who runs Tax Research and has been a chartered accountant for 31 years. He said, “Under current UK law there would be no capital gains tax charge because capital gains are charged on where the company is resident, not where the property is, and these companies are not resident in the UK.” Meanwhile, any income recognised would also likely be charged at a reduced rate of tax.

In fact, whilst Westfield UK operates Europe’s largest urban shopping centre, it has maintained a net tax liability of less than half a million pounds for over more than a decade to 2011, as reported by the ABC. Considering its multibillion-dollar revenue over that period, the company would have one of the lowest corporate tax rates going around.

Meanwhile, it has also been alleged by United Voice that the group avoided paying a significant amount of property taxes in the US. Whilst no suggestions have been made that the company has broken any taxation laws in either country, the research is more designed to draw attention to the arrangements being undertaken by some companies to avoid paying their fair share of taxes.

Foolish takeaway

At today’s price, Westfield still looks like an attractive buy – particularly given its potential to grow further globally. Currently, the shopping centre operator maintains operations within Australia, New Zealand, the US and the UK but is exploring opportunities to enter into emerging markets such as Brazil.

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

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