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Mining giant caught using island to avoid paying tax

BHP trading
BHP trading

A multinational resources company must pay tax on any commodity sales even though it was facilitated by its overseas centre, a court has ruled.

The High Court of Australia has found BHP Billiton Group cannot avoid contributing to Commonwealth revenue on any profit made at its Singapore marketing hub by declaring BHP UK as an “associate” for tax purposes.

Case closed

The decision affects any money the hub makes in Singapore’s relatively low tax jurisdiction from selling commodities produced by the Australian subsidiaries of BHP UK. It effectively ends an ongoing dispute between the proponent and Australian Taxation Office (ATO).

“This decision means that BHP Australia was taxable on its share of profits derived by the marketing hub from selling commodities mined in Australia which it purchased from BHP UK’s Australian subsidiaries,” ATO deputy commissioner Rebecca Saint said in a public statement.

$125M blow

BHP Australia is already taxed on all profit made at the marketing hub from selling Australian commodities and previously settled 11 years of tax owed totalling $661 million. The company has now been ordered to pay $125 million in back payments.

“This long running dispute is now concluded, and Australians can have full confidence that BHP, as one of Australia’s largest companies, is paying full tax on its profits from the sale of Australian commodities,” Saint said. “We are committed to taking strong action to ensure multinationals comply with the Australian tax regime and we are prepared to litigate to protect the integrity of the Australian tax system.”

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Click here to read the full High Court decision.

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