ATO accuses Hilton Worldwide of tax avoidance
Hilton Worldwide has been accused by the Australian tax Office (ATO) of setting up a scheme to deliberately minimise its tax in Australia.
The global hotel chain is fighting the allegations, along with accusations of unpaid taxes.
Hilton launched legal action against the ATO in June this year to dispute an assessment that found it owed $80.7 million in unpaid taxes as well as penalties and interest.
It is alleged that Hilton’s 2022 accounts for the Australian business shows it owes $51 million in taxes over the 2015 Sydney Hilton sale to Chinese investment house Bright Ruby for $442 million.
The dispute relates to a capital gain allegedly not recorded.
The ATO is seeking unpaid taxes as well as $13 million in penalties and $15.7 million in interest.
In response, Hilton has agreed to pay an instalment of $26 million to the ATO.
The Federal Court has redacted the amount still in dispute from the documents.
The alleges Hilton is using a business structure and scheme designed to avoid tax. The hotel giant has refuted the allegation.
Hilton says in its appeal document: “The respondent erred in concluding that the purported scheme was entered into or carried out for the dominant purpose of obtaining a tax benefit because, on an objective assessment of all relevant circumstances, any person who entered into or carried out the purported scheme or any part of it, did so for the dominant purpose of achieving the applicant’s commercial objectives and further did so in a manner that was commercially preferable to the respondent’s alternative postulates.”
The case is yet to be heard in open court and the next hearing is scheduled for April.
A spokeswoman for Hilton in Australia declined to comment, however the chain stated: “Hilton Australia is fully committed to adhering to all relevant laws and regulations in the jurisdictions that we operate in.”
Jonathan Jackson, 4th September 2023
