PERTH (miningweekly.com) – Mining giant BHP Billiton is continuing to dispute taxes levied by the Australian Taxation Office (ATO) on the company’s Singapore marketing hub activity, saying in its yearly taxation report on Wednesday that it will initiate court action if necessary.
The ATO has struck BHP with a A$1.02-billion tax bill for an 11-year period, between 2003 and 2013, with the ATO disputing the amount of taxes payable as a result of the sale of Australian commodities through the Singapore hub.
Of this tax bill, A$661-million is primary tax while A$559-million is interest and penalty charges. The primary tax in dispute represents less than 2% of the taxes and royalties paid by BHP over the 11-year period.
The dispute relates to the price at which the commodities were sold, and is thus a valuation issue, rather than a tax avoidance issue, BHP pointed out on Wednesday.
BHP said in its report that it did not agree with the ATO’s position, has objected to all of the amended assessments and will "defend its position".
Profits made in Australia from the production of commodities are taxed at the normal Australian corporate tax rate, and BHP also pays royalties for these commodities.
In addition, around 58% of the profits made by the Singapore marketing hub, from the sale of Australian commodities, are taxed in Australia, at the normal corporate tax rate, under the Controlled Foreign Company Rules, as the Singapore marketing hub is 58% owned from Australia and 42% owned from the UK.
BHP has revealed that it paid a total of $3.7-billion in global taxes during the 2016 financial year, of which $2.5-billion was paid in Australia.
The company’s total economic contribution for the financial year, including wages, employee benefits, and taxes, reached $26.7-billion.
CFO Peter Beaven noted that while the payment of taxes and royalties for 2016 decreased compared with the previous years, this was reflective of lower profits owing to lower commodity prices.
“Our global adjusted effective tax rate has remained stable throughout the cycle, averaging 31.9% over the past decade. In Australia, where we pay the majority of our taxes and royalties, we continue to be one of the largest taxpayers.”
Beaven noted that over the last decade, BHP had paid some $85-billion in global taxes and royalties, of which some $58-billion went to Australia.
Edited by: Creamer Media Reporter
EMAIL THIS ARTICLE SAVE THIS ARTICLE
To subscribe email subscriptions@creamermedia.co.za or click here
To advertise email advertising@creamermedia.co.za or click here
