INTERNATIONAL COAL NEWS

Rio, Glencore outshine BHP at tax inquiry

BHP Billiton has risked being held in contempt of the Senate by using the "commercial in confiden...

Staff Reporter

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On Friday BHP refused to say how much the ATO believed it is owed due to the way BHP channels profits through a marketing hub in Singapore, prompting the Senate corporate tax avoidance committee to then demand that the miner answer its questions.

“BHP’s failure to give answers and basic information was far from satisfactory … and their arguments about it being commercial in confidence were undermined by Rio Tinto sitting beside them at the hearing and being prepared to give the same information,” committee chairman, Labor Senator Sam Dastyari, said was the unanimous view of the committee.

Greens Senator Christine Milne, who pushed for the inquiry in the first place, jumped on BHP’s refusal, saying it was “completely unacceptable they are refusing to say how much the ATO has asked them to pay”.

“No one will accept this. It beggars belief,” she said.

BHP’s president of corporate affairs Tony Cudmore confirmed that the ATO was auditing the operations of its Singapore-based marketing hub, but BHP would not say whether the ATO had given it an estimate of the tax it believed was owing, or how much the estimated bill might be.

BHP’s head of group tax, Jane Michie, said the company was in discussions with the ATO about “the correct transfer pricing methodology regarding the sale of commodities to the Singapore hub … It comes down to pricing … have we priced the commodities we sell to Singapore correctly”

Asked whether the tax office had issued BHP with a position paper –an assessment of the tax the ATO believes should be paid – Michie said: “We would prefer not to provide a running commentary regarding where we are at ... we would prefer not to answer that question, thank you.

“We firmly believe in the position we have adopted. The tax office can state what their position is, but we firmly believe in our position, so in that sense the tax office numbers are not really relevant to us,” she said.

Cudmore said: “We believe this is a competitively sensitive matter.”

Rio managed to escape much of the limelight so far with its Australian managing director Phil Edmands telling the inquiry that its Singapore hub paid a 5% tax rate in 2014 and made a $790 million profit that year.

Glencore took the high road by saying it will shut down its Singapore hub which came courtesy of its 2013 takeover of diversified mining house Xstrata.

The numbers it revealed seemed less convincing too, with coal market downturn-exposed Glencore saying it made a $1.4 billion loss in the last financial year and paid $77 million in tax on revenue of $13 billion.

Glencore head of corporate affairs for Australia Cassandra McCarthy said the company would sell directly from Australia and would simplify its corporate structure in the nation.

She revealed that 46% of Glencore Australia division exports were channelled through the Singapore hub in 2013 while Glencore regional finance lead Nick Talentyre said it was a “trading hub” when asked if it was considered a tax haven.

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