BHP Rebukes Tax Critics After Claims of Evasion in Australia

  • Chairman Nasser says it paid $58 billion over 10 years
  • Former Australian Treasurer accused BHP of ‘gaming the system’

BHP Billiton Ltd., the world’s biggest mining company, rejected claims of tax evasion in Australia by pointing to $58 billion in taxes and royalties paid in the country over the past decade.

“We’re astonished to hear some politicians claiming that we haven’t been paying our fair share,” Jac Nasser, chairman of Melbourne-based company, told an audience of investors, executives and journalists at a company event in London on Monday night. “If we were avoiding tax, we’re clearly no good at it.”

Last week, former Australian Treasurer Wayne Swan, who was locked in a dispute with BHP and rival Rio Tinto Group over a plan to raise taxes earlier this decade, accused the company of funneling sales through its Singapore marketing hub to help lower its tax bill. The practice, known as transfer pricing, is not illegal though increasingly attracts scrutiny of governments around the world seeking to crack down on the strategy.

“The evidence against BHP is damning,” Swan told Australia’s parliament on Oct. 12 as lawmakers discussed a bill on international tax agreements. The use of transfer pricing has cost Australian taxpayers “well over” A$1 billion ($767 million), he said.

‘Serious Dispute’

“There is now no question that BHP has been gaming the system and is in serious dispute with the tax office over its unpaid taxes,” he said.

Chief Financial Officer Peter Beaven told reporters in Melbourne last month that the company was negotiating with the Australian Tax Office over a A$1.02 billion bill for pricing of commodity sales to its Singapore marketing unit.

The company said last month that tax is paid in Australia on the 58 percent of the profits generated by its Singapore unit relating to Australian commodities. That meant that an additional A$1 billion of tax in Australia on revenue generated in Singapore over the last 10 years.

BHP’s average tax rate over the last decade including royalties is 40 percent, Nasser said. Globally, the company paid $85 billion in taxes and royalties over that period.

“It is clear that we need to do a better job at communicating the contribution we make and the taxes we do pay,” Nasser said. “The fundamental question here is how effectively the $85 billion in taxes and royalties have been spent.”

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