The amount of Australian tax disputed by BHP Billiton has doubled to more than $1 billion.
The disagreement with the Australian Tax Office (ATO) centres on BHP’s use of a Singapore office to sell commodities mined in Australia.
BHP says the dispute relates to the price at which Australian commodities are sold. This is called transfer pricing.
“It is a valuation issue and does not involve tax avoidance,” the company says in its 2016 report, Economic contribution and payments to governments, released today.
The federal government is cracking down on multinational companies avoiding tax by booking revenue in other jurisdictions with lower tax rates.
The ATO is getting $679 million in extra funding over four years for a taskforce to ensure multinationals, private companies and wealthy individuals pay the right amount of tax.
BHP’s report shows the company paid $US2.52 billion ($A3.3 billion) in 2016 to Australian governments.
“BHP Billiton does not agree with the ATO’s position,” the company says.
It has objected to all of the amended assessments from the ATO and will continue to defend its position by court action if necessary.
The assessments from the ATO now total $A1.016 billion over the 11 years from 2003 to 2013.
BHP says the amount is less than 2% of all the taxes and royalties paid in Australia over that time.
The latest amended assessments from the ATO, for the financial years 2009 to 2013, added $A537 million to the tax bill.
“All the profits made in Australia from the production of commodities are taxed in Australia at the normal Australian corporate tax rate,” BHP says.
The world’s biggest miner also pays royalties. Since 2007, BHP has paid $65 billion in taxes and royalties.
“In addition, around 58% of the profits made by our Singapore Marketing business from the sale of our Australian commodities are taxed in Australia, at the normal corporate tax rate, under the Controlled Foreign Company rules,” BHP says.
“This is because our Singapore Marketing entity is ultimately owned 58% from Australia and 42% owned from the United Kingdom (which reflects the relative values at the time the Dual Listed Company structure was created).”