BHP Billiton disputes $1B tax bill from ATO

BHP Billiton is disputing the $1 billion tax bill sent by the Australian Taxation Office. The mining giant was billed in additional taxes including interest and penalties over its Singaporean marketing office.

The ATO has hit BHP with a $1.016 billion tax for the 2003 to 2013 fiscal years. The company was previously given $362 million in extra taxes and penalties for 2003 to 2008, but the new ATO report adds $537 million for the fiscal years 2009 to 2013, as well as $117 million in added mining tax.

The tax agency has recently warned companies using tax havens to avoid paying in Australia. It said companies with a profit margin of more than 100 percent in the tax haven would be subjected to full-scale audit.

Singapore’s corporate tax rate is 17 percent, well below Australia’s 30 percent rate. ATO is challenging the price paid by BHP’s Singapore division for Australian commodities produced by the company’s other subsidiaries.

BHP is disputing the accounting, though. Chief Financial Officer Peter Beaven said on Wednesday that the company pays its fair share of tax. Its adjusted effective tax rate in the 2016 financial year was 35.8 percent. And when royalties are included, it is more than 58 percent.

“Over the last decade, our average effective tax rate was higher than the 30 percent company rate in Australia and the average OECD rate of 25 percent,” Beaven said.

“Debates about tax need to be informed by facts. It is crucial that the conversation addresses how tax systems take into account the realities of operating in a global economy as well as national interests. This will enable stable investment environments that encourage growth and development.”

BHP, which has also released annual report and sustainability report for 2016, said it has paid approximately US$85 billion (AU$112 billion) in taxes, royalties and other payments to governments globally, including US$58 billion (AU$77 billion) in Australia.

Apart from Singapore, BHP Billiton also has subsidiaries in low-tax jurisdictions Panama, British Virgin Islands, Guernsey, Bermuda and the Cayman Islands.