BHP says it’s paying a fair share of taxes
BHP Billiton has defended the use of a Singapore marketing hub to minimise its tax payments, saying most of its Australian profits continue to be taxed in its home country.
The resources giant, which came under fire earlier this year over allegations of tax avoidance, says its global adjusted effective tax rate was 31.8 per cent, well above the Organisation for Economic Co-operation and Development (OECD) average corporate income tax rate of 25 per cent.
The company paid $US7.3 billion ($A10.30 billion) in taxes, royalties and other payments to governments in the countries it operates in around the world during the 2014/15 financial year.
Of this, nearly $US5.24 billion was paid in Australia.
“These are large amounts, and what would be regarded as fair,” chief financial officer Peter Beaven said on a conference call.
BHP and rival Rio Tinto, along with other multinationals including Apple and Google have been under investigation by the Australian Taxation Office since earlier this year over the use of Singapore marketing hubs to allegedly reduce their tax bills.
The company said it has fully disclosed and explained to the authorities its reasons for the Singapore operations.
“We are in Singapore because its the most appropriate place to undertake that part of the value chain. Additionally, it also has a very attractive tax rate,” Mr Beaven said. The Singapore operatons were 64 per cent-owned by the Australian unit, and were, therefore, also subject to Australian taxes, he said.
BHP pays tax at an average rate of 32.5 per cent in Australia, but pays zero tax on its marketing operations in Singapore.
Last week, the federal government introduced draft laws to target tax avoidance by big international companies. However, the move comes just a month ahead of the findings from a broader action plan under the OECD/G20 base erosion and profit shifting (BEPS) project.
BHP supports reform on BEPS, but believes this should only come through a multilateral effort, Mr Beaven said.
“If there is clumsy, unilateral action, it could end up in a very chaotic and competitive situation. You could have a situation where we have to pay tax twice,” he said.
