MELBOURNE • BHP Billiton confirmed yesterday that it paid no tax on its global marketing base in Singapore, but said it was not the only reason for using the island state as a commodities trading hub and that it paid a fair share of tax worldwide.
Australia's tax office is investigating the mining firm and rival Rio Tinto for shifting billions of dollars in iron ore profits through marketing hubs in Singapore.
"(Singapore) has a very attractive tax rate. We're not ashamed of that. Obviously we would like to minimise the amount of tax that we pay, so it is part of the attraction of Singapore," BHP chief financial officer Peter Beaven told a news briefing yesterday.
ATTRACTIVE TAX RATE
(Singapore) has a very attractive tax rate... Obviously we would like to minimise the amount of tax that we pay, so it is part of the attraction of Singapore.
MR PETER BEAVEN, BHP's chief financial officer, who also said it was not the only reason for using Singapore as a commodities trading hub.
But he said it was not the only attraction of Singapore and cited its proximity to the majority of BHP's customers as well as its good logistics as reasons for choosing the location. When asked if BHP paid zero tax on its Singapore marketing operations, he said: "That's correct."
Mr Beaven said that there was a small mark-up on commodities produced globally and sold into Singapore, but this reflected an "appropriate value add" by its marketing team that helped to get the best deal for producers and boosted the value of commodities like iron ore taxed in Australia.
Less than 1 per cent of the total profit generated from Australia was not taxed in Australia, he said.
BHP has other business divisions located in Singapore, on which it paid a small amount of tax, he added. "It's a place that's very pleasant to live in, so we can attract the best talent on a global basis," he added.
The company paid US$5.2 billion (S$7.4 billion) in taxes, royalties and other payments to the Australian government, Mr Beaven said, part of a total global economic contribution last financial year of US$35.7 billion, which also included community contributions, payments to suppliers, wages and employee benefits and dividends.
On tax alone, he said the miner paid over US$7.3 billion to governments in the 2015 financial year. "We pay what we regard as a very fair amount of tax," said Mr Beaven. He said BHP's global adjusted effective tax rate was 31.8 per cent, above the Organisation for Economic Cooperation and Development average of around 25 per cent.
Australia's Taxation Office said it did not comment on issues surrounding specific companies for confidentiality reasons.