Aldi opens up on its fantastic profits, without fantasy on tax

Posted by AFN Staff Writers on 13th July 2015

aldi-logoAldi has opened up about its profits and taxes in a submission to the Federal Senate inquiry into tax avoidance. In the submission, Aldi outlined how much it earnt and how much tax it paid to the Australian Taxation Office (ATO) between 2010 and 2013.

Unlike Coles, Woolworths and Metcash, Aldi supermarkets are privately owned and accordingly do not have to reveal profits figures in the public domain. However, the supermarket’s submission comes after Wesfarmers Chief Executive Richard Goyder made insinuations in June 2015 that Aldi might not be meeting its Australian tax obligations.

Aldi responded directly in June 2015 that its average corporate tax rate was 31 per cent and it then disclosed what it paid in taxes to the ATO for 2013.

The latest submission by Aldi last week demonstrates a strong growth trend in Aldi’s sales and profits and consequent growth in tax payments made to the ATO.  In 2010 Aldi’s total gross revenue was $3,139 million with the company’s net profit being $121 million that year, with the company’s income tax expense being $35 million.

By 2013, Aldi’s Australian total gross revenue had grown to $4, 998 million, the company’s net profit was $261 million and the supermarkets tax bill came to $83 million.

Aldi Profit and Taxes Image 1
Source: Aldi submission to Senate inquiry

Aldi’s relationship with the ATO

Aldi used the submission to state that it has always had a “open and positive” working relationship with the ATO. The supermarket said that the ATO classifies the company as low-risk for both income tax and GST in relation to its risk differentiation framework which is used to assess tax avoidance risk.

Aldi and transfer pricing

Aldi addressed its approach to transfer pricing in the submission stating:

“Aldi’s international related party transactions are undertaken on an arm’s length basis and in accordance with the “OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations” and Australian transfer pricing regulations.

This includes the application of appropriate transfer pricing methodologies based on a detailed analysis of the functions performed, risks assumed and assets employed by all entities that are party to international related party transactions.”

Aldi Profit and Tax Image 2
Source: Aldi submission to Senate inquiry

“For the respective periods in the table above, Aldi submits that it did not hold any interest-bearing related party debt on its balance sheet nor pay any royalties or licence fees to international related parties.

“In summation, as evidenced above, Aldi wishes to make it explicitly clear that it does not engage in the inappropriate pricing of international related party transactions for the purposes of artificially reducing taxable profits in Australia,” the Aldi submission said.