BHP Scolded for Tax ‘Dummy Spit’ by Former Australian Treasurerby
Former treasurer demands an explanation on transfer pricing
BHP Chairman Nasser is ‘astonished’ by tax evasion claims
Former Australian Treasurer Wayne Swan labeled BHP Billiton Ltd.’s response to his allegations of tax evasion a “dummy spit” and demanded an explanation for its practice of funneling some sales of resources in the nation through Singapore to lower its tax burden.
“The dummy spit by BHP executives in London” was “yet another example of how out of touch corporates are with ordinary people and why, around the world, many corporates are held in such low regard,” Swan, who was Australia’s treasurer from 2007 to 2013, said in a speech to parliament on Wednesday. “The board of BHP should provide a full and frank explanation of its role in approving this aggressive transfer pricing.”
BHP Chairman Jac Nasser said on Monday he was “astonished” to hear politicians claiming the world’s biggest mining company was avoiding payments and pointed to the $58 billion in taxes and royalties paid in Australia over the past decade. The mining company is also fending off a proposal for higher taxes in the state of Western Australia, the home to its giant iron-ore division that posted sales of $10.5 billion in fiscal 2016.
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 ($784 million) bill for pricing of commodity sales to its Singapore marketing unit.
Swan, who was locked in a dispute with BHP and rival Rio Tinto Group on a proposed new tax earlier this decade, last week accused BHP of “gaming” the system and costing Australian taxpayers more than A$1 billion. Swan, a member of Australia’s opposition Labour party, made the comments in an Oct. 12 speech to parliament as lawmakers discussed a bill on international tax agreements.
“If we were avoiding tax, we’re clearly no good at it,” Nasser responded Monday at a company event attended by investors, executives and reporters in London where the company is hosting its annual general meeting of shareholders on Thursday.
While the practice of transfer pricing is not illegal, it increasingly attracts scrutiny of governments around the world seeking to crack down on the strategy.
“It is now clear that for over a decade there has been a culture of tax avoidance in BHP, so I asked the question: why have they been using aggressive transfer pricing to evade their legal responsibilities,” Swan said today.
BHP has said it pays tax in Australia on 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 almost 40 percent, Nasser said.