Rio Tinto pays US$4 billion in 2016 taxes, royalties; down 12%

A sign is seen outside Rio Tinto's office in Perth, Australia.
A sign is seen outside Rio Tinto's office in Perth, Australia. PHOTO: REUTERS

SYDNEY (Reuters) - Mining giant Rio Tinto Ltd said on Sunday it paid US$4 billion in taxes and royalties globally in 2016, a 12 per cent drop on 2015 that primarily reflected lower earnings.

The release of its annual tax transparency report comes as the Australian Taxation Office (ATO) issued amended income tax assessments for the company last Wednesday, covering calendar years 2010 to 2013.

The tax authority ordered Rio Tinto to pay additional tax of A$379 million plus interest of A$68 million for those four years, due to the global miner's use of marketing hubs in tax-friendly Singapore.

Rio Tinto said its effective group tax rate was 22 per cent for the year ended Dec 31, with the majority of tax and royalties paid in Australia - a figure of about US$2.9 billion.

In the report, Rio Tinto said it had reduced the number of entities registered in so-called tax havens to 12, but its was still "engaged in discussions" with the ATO over use of its Singapore hubs.

"While we are satisfied these transactions align with tax requirements, differences of interpretation between companies and tax authorities can occur," Rio Tinto said, adding it will challenge the additional amount ordered by the ATO.

The dispute comes as the ATO has increased scrutiny over how much tax multi-nationals operating in Australia pay.

A senate corporate tax inquiry previously said Rio Tinto and BHP Billiton were using Singapore marketing offices to shift profit from Australia to minimise tax.

Chris Lynch, Rio Tinto's chief financial officer, said the company was committed to tax transparency, but tax law should never be retrospective.