Rio pays less tax in 2013

RIO Tinto recorded a 19% decrease in its global tax payments over 2013 to $US7.5 billion ($A8.3 billion), flagging policy concerns over reporting requirements and world taxation regimes.
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Justin Niessner

The year-on-year decrease in the company’s taxes paid was attributed to the timing of instalment payments of corporate income taxes with lower payments in 2013 in respect of 2012 profits.

The total underlying tax charge for the year, including final payments due after 2013, was $9.1 billion, which represents 47% of Rio underlying profit before all taxes.

The company’s iron ore division represented the bulk of the total, with $5.5 billion of tax charged for the year.

The majority of Rio’s taxes were paid in Australia ($5.7 billion), followed by Canada ($523 million) and Chile ($380 million).

The company also reported $1.9 billion of taxes paid on behalf of its employees, with $1.1 billion of it paid in Australia.

Of $55 billion in total gross sales revenue generated in 2013, Australia accounted for $34 billion.

Revenues were spent mostly on suppliers (44%), followed by payables to governments (16%).

Corporate income tax was the largest component of the company’s payments around the world, followed by government royalties and employer payroll taxes.

In Rio’s fourth annual report on taxes paid, chief financial officer Chris Lynch said the company’s tax strategy and payments were central to long-term development.

“This report demonstrates the significant contribution Rio Tinto makes to public finances in the countries where it operates around the globe,” Lynch said.

“We are a strong advocate for global tax transparency and this is reflected through this report and our founding membership of the extractive industries transparency initiative.

“However, Rio Tinto is concerned about additional compliance costs associated with the proliferation of new regulatory initiatives around worldwide tax reporting that have recently been introduced, or are under consideration, by various governments.

“A multitude of different reporting formats is unlikely to result in greater clarity and will impose additional costs upon companies, with little or no public benefit.”

Lynch said debate on natural resource taxation should also consider the cyclical nature of the mining industry, respecting agreements under which investment capital had already been committed.

“For an industry that makes multi-decade investments, with significant upfront capital expenditure, the risk of fiscal instability will influence the global flow of capital and a country’s ability to attract and retain investment,” he said.

“Above all, tax law should never be retrospective.”