BHP Billiton warns of backlash over any Australian tax-grab policies
BHP Billiton has warned any move by Australia to single-handedly combat corporate profit shifting could spark a backlash from other nations that is likely to ultimately harm local companies.
Finance director Peter Beaven says while action on so-called base erosion and profit shifting is needed, it must be part of a combined global effort so as not to introduce even more complexity into tax rules.
“We are concerned that if this is done in a clumsy, unilateral way you could have a situation where we are having to pay tax twice on the same part of the value chain,” Mr Beaven said on Wednesday.
Any move by Australia to claw back tax it believed it was owed could prompt counter claims from other countries on divisions of global businesses operating here that are only taxed locally, Mr Beaven said.
“That would be not only to the detriment of ourselves (BHP) but, in fact, Australia itself,” he said.
Former federal treasurer Joe Hockey last week moved to introduce draft laws to target tax avoidance by multinational companies, although Mr Beaven said they would not impact BHP.
The move comes ahead of a broader action plan being created by the Organisation for Economic Co-operation and Development and the Group of 20 leading economies.
BHP yesterday unveiled a new tax and payments report that showed it made $US5.2 billion ($7.4 billion) in payments to Australian governments for the year to June.
That included $US1.9 billion ($2.7 billion) in corporate income tax.
“These are large amounts an absolutely in line with what would be regarded as fair,” Mr Beaven said.
He also defended the company’s controversial Singapore marketing hub, saying the local taxman lost virtually no income from the operation as applicable profits were taxed locally under Australia’s Controlled Foreign Companies rules.
Shareholders will be asked to vote on a new dividend policy under which Australian investors will need to give up some of their franking credits in order to ensure the miner can continue to match payments to its UK shareholders.
BHP’s British arm lost various assets as part of the South32 demerger earlier this year and is not earning enough to cover future dividend payments.
The group wants its Australian arm to be able to make payments from after-tax earnings to its UK operation — a move that would eat into the company’s $US11 billion franking credit pile here.
BHP’s Australian-listed shares tumbled 4.4 per cent on Wednesday to close at $22.80.
Separately on Wednesday, the group’s annual report revealed chief executive Andrew Mackenzie had his pay and perks package trimmed for the year to June, but a falling Australian dollar more than covered the blow.
Mr Mackenzie received a package worth $US6.9 million ($9.6 million) on a statutory basis for the year to June, down from $US7.1 million a year earlier.
A falling Aussie, relative to the greenback, means the Melboure-based Scotsman’s package was worth $9.6 million for the year to June, up from $8.9 million a year earlier.
