Mining giant BHP to pay A$529m to settle long-running tax dispute over Singapore hub

BHP said it had reached the settlement with the Australian Taxation Office "with no admission of tax avoidance".
BHP said it had reached the settlement with the Australian Taxation Office "with no admission of tax avoidance".PHOTO: REUTERS

SYDNEY (AFP, REUTERS) - Mining giant BHP on Monday (Nov 19) settled a long-running tax dispute with Australian authorities for A$529 million (S$531.2 million), as the country pursues global firms shifting profits offshore to minimise liabilities.

The Australian Taxation Office (ATO) has been investigating multinationals for alleged avoidance, such as through transferring billions of dollars in profits offshore to countries like Singapore.

The world's second-largest miner Rio Tinto is also facing a large bill from the ATO over its tax arrangements, and has said it would challenge the assessment.

Canberra has sought to crack down on tax avoidance by multinationals by introducing new laws, including stronger protection for whistleblowers and harsher penalties for failure to meet compliance or disclosure requirements.

Companies including Apple, Google and BHP were grilled on their tax structures at parliamentary hearings in 2015.

BHP said it had reached the settlement with the ATO "with no admission of tax avoidance".

As part of the deal, the world's biggest miner will pay a total of about A$529 million in additional taxes on income for 2003 to 2018, BHP said in a statement. It has already paid A$328 million of that.

 
 
 

The dispute was regarding the amount of Australian tax payable from sales of BHP's Australian commodities to its Singapore marketing business.

"(The deal) fully resolves the long-standing dispute... with no admission of tax avoidance by BHP, and provides certainty in relation to the future taxation treatment," BHP said.

Additionally, BHP will raise its stake in BHP Billiton Marketing AG, which is the main company conducting the miner's Singapore marketing business, to 100 per cent from 58 per cent. The change in ownership will make all profits made in Singapore from Australian assets owned by BHP fully subject to Australian tax, the miner added.

"This is a landmark and precedential development in the execution of our marketing hubs strategy, and sends a strong signal to other industry participants," the ATO said in a statement. "Given the importance of mining and natural resources to the Australian economy, it is critical that exporters of Australian commodities, whether iron ore, coal, gas or other commodities, pay the correct tax in Australia on their profits."

A spokesman for Rio Tinto said that its discussions with the ATO were ongoing and otherwise declined to comment.