Taxmen teaming up
News Corp. facing 4-way revenue probe
The inquiry is focusing on ways to block the international tax loopholes that have enabled Murdoch's empire to pay far less tax than other major media groups.
The authorities in Australia, where News Corp. is based, initiated the inquiry by calling a secret meeting last December in Sydney with tax investigators from the three other countries where Murdoch has substantial interests.
In New York, News Corp. CFO David Devoe said Wednesday that News Corp. had not been notified of any such investigation. He noted that News is audited in each jurisdiction by the relevant tax authorities.
Last year News Corp. reported paying just $103 million in tax on profits of $1.32 billion worldwide, a rate of 7.8%. By contrast, the Walt Disney Co. paid 28% tax.
An investigation by the Independent in 1995 claimed that News Intl., Murdoch's U.K. subsidiary, had paid just 1.2% of its profits in tax over the previous decade, compared with 29% by the rival Telegraph group and 20% by the Mirror Group.
The newspaper notes that News Corp's actions are perfectly legal and had made sophisticated use of legal tax avoidance measures such as intercompany loans, off-shore tax havens and the tax relief granted to interest on loan repayments.
Sources close to News dismissed the Independent report, noting that the Australian tax authorities share information with other countries' tax authorities as part of their audits.
Sources noted that the report in the Independent was part of a bigger story about Prime Minister Tony Blair's opposition to a proposal before the British Parliament for action to stop News Corp. cutting the prices of its U.K. newspapers. News' price-cuts have hurt rival newspapers, including the Independent.
(Martin Peers in New York contributed to this report.)
