BHP vows to fight Aussie authority over tax bill

BHP Billiton's iron ore stockpiles. The Australian Tax Office says the miner needs to pay US$766 million (S$1.04 billion) in back taxes and charges for its Singapore commodities marketing hub.
BHP Billiton's iron ore stockpiles. The Australian Tax Office says the miner needs to pay US$766 million (S$1.04 billion) in back taxes and charges for its Singapore commodities marketing hub.PHOTO: AGENCE FRANCE-PRESSE

Miner said to have moved billions of dollars in iron ore profits through S'pore marketing hub

SYDNEY • BHP Billiton yesterday said it disagreed with the Australian tax collector's assessment that the miner needed to pay US$766 million (S$1.04 billion) in back taxes and charges for its Singapore commodities marketing hub, and that it could resort to court action to fight the claim.

BHP is under investigation by the Australian Tax Office (ATO) for allegedly moving billions of dollars in iron ore profits through marketing hub in Singapore, where it operates under an effective tax rate of zero as part of a concessional tax deal.

Last year, the miner was also accused by an Australia Senate corporate tax inquiry of using its Singapore marketing office to move profits from Australia and minimise its tax. The ATO has estimated that BHP, the world's biggest mining company, needs to pay A$1.016 billion (S$1.04 billion) in back taxes and charges spanning the period between 2003 and 2013 for its Singapore marketing hub.

BHP chief financial officer Peter Beaven said, while releasing the firm's fiscal 2016 report on its global tax bill, that "BHP Billiton does not agree with the ATO's position".

"Consequently, we have objected to all of the amended assessments and intend to continue to defend our position, including by initiating court action if necessary," he added.

Mr Beaven pointed out that BHP had been paying the Australian corporate tax rate of 30 per cent on 58 per cent of the profit generated by the Singapore business - the latter representing the Australian proportion of BHP held under the miner's dual Australia-United Kingdom ownership structure. The dispute stems from the price BHP sells its commodities produced in Australia to its Singapore business before selling them to customers for a profit.

"It's an evaluation issue, it's not a tax avoidance issue," Mr Beaven told reporters.

The ATO did not immediately respond to a request for comment.

BHP's tax report shows the miner paid US$3.7 billion in global taxes, royalties and other payments to governments in fiscal 2016. This was down from US$7.3 billion in fiscal 2015 and reflected a downward slide in prices of iron ore, copper and other commodities last year.

Iron ore in fiscal 2016 generated US$10.5 billion in revenue for BHP, down 29 per cent from a year ago.

REUTERS

A version of this article appeared in the print edition of The Straits Times on September 22, 2016, with the headline 'BHP vows to fight Aussie authority over tax bill'. Print Edition | Subscribe