PRI Co-ordinated Engagement on Corporate Tax Responsibility for 2018-19
Company Notes on Ramsay Healthcare (Lead Investor: Vision Super Pty Ltd)
As part of the Company’s commitment to transparency and being a responsible tax payer, the Board resolved during FY2017 that the Company would voluntarily disclose against the Australian Board of Taxation’s Voluntary Tax Transparency Code. A copy of the Company’s Australian Tax Governance Report can be found on the Company’s website (http://www.ramsayhealth.com/Investors/Australian-Tax- Governance). (p24 AR)
Ramsay’s tax corporate governance framework and its documented policies and procedures have been in place for many years. Important elements of Ramsay’s tax corporate governance documentation include: - The process by which Ramsay will identify, assess and mitigate Australian tax risks - The Board’s tolerable level of tax risk in accordance with its proactive and risk averse approach to taxation - A framework for the management of, and requisite reporting levels for, each type of tax risk/roles and responsibilities are clearly articulated. (TGR)
The Group Finance Director has concerns about country by country reporting and stated that people couldn’t match up Ramsay’s EBITDA with taxes paid, due to leverage, tax loss provisions from prior years etc.
Ramsay will not undertake country by country reporting. It does not wish governments to compare rates of tax payable in different jurisdictions.
Ramsay Healthcare has signed up to the Australian Board of Taxation’s Voluntary Tax Transparency Code. The Board robustly discusses tax twice a year (half year and full year results).
The audit partner presents and is questioned during these sessions. The Group Finance Director is usually absent from these sessions.
Ramsay has significant regulatory risk and informally characterizes itself as risk adverse on tax.
The Board of Directors’ role includes ensuring good tax corporate governance. Part of exercising good tax corporate governance involves the establishment of a strong framework for managing tax risk.
The Board acknowledges the need to articulate and disseminate the acceptable level of tax risk tolerance within Ramsay.
In this regard, Ramsay adopts a proactive and risk averse approach to taxation built upon transparency and pro-active engagement with the Revenue authorities.
Ramsay did not make any formal commitments to improve specifically any other areas around tax disclosure during our on-site meeting.
Ramsay’s business primarily involves the operation of private hospitals in Australia and overseas in England, France, Malaysia and Indonesia.
Ramsay is committed to being a responsible corporate taxpayer. Ramsay values ethical behaviour, integrity and respect in all aspects of its operations including its approach to tax.
Ramsay is open and transparent in its approach to tax. Ramsay supports and adopts the Board of Taxation’s voluntary tax transparency code and is pleased to present its Tax Governance Report.
The tax rate paid on average in Australia is around 29% which is close to the effective Australian corporate statutory tax rate of 30%. Ramsay pays an effective tax rate in France of 44%, its highest tax paying jurisdiction of business.
Ramsay has most of its debt in France so that, its earnings are lower in France than they otherwise would be if debt was pro-rata’d across the business. At our meeting the Group Finance Directors stated that this is because Ramsay’s investment is a joint venture and the debt is non-recourse. Ramsay has a Singapore office. There is a worldwide prosthetics global procurement business located there. Minimal tax is paid in Singapore but there are minimal revenues from this operation anyway. Ramsay approached the tax office about this before they implemented the arrangement.
Ramsay most likely structures their debt arrangements to be tax efficient. Most of the debt is in France purportedly because they are in a joint venture and have non-recourse debt. However, France is a large part of the business and a write off would be catastrophic. It seems likely that tax reasons are an important reason for more debt being taken out in France.
However, they do not undertake transfers of profit to low tax jurisdictions to minimize tax.
Ramsay is relatively transparent in its reporting. It is highly dependent on government for its revenues. It recognizes that it has a high regulatory risk from aggressive tax policy. The company is relatively conservative on taxation, but its debt is distributed in a tax efficient manner, it has lobbied government to protect its interests and it will not undertake country by country reporting unless compelled to do so.
SuperRatings Infinity Rating
Vision Super received a SuperRatings' Infinity Rating for environmental and social responsibilities for 2020. This was the 11th time that we have received a SuperRatings' Infinity Rating. The Infinity Rating recognises Vision Super as leading the industry in sustainable behaviour with genuine responsible investment principles, openly communicating with fund members and having sound internal sustainability practices underpinning our responsible investment practices.