Former Australian Labor Treasurer Wayne Sway has alleged that mining giant BHP Billiton has been evading taxes for years. Swan specifically alleged that the company had sold minerals mined in Australia to its Singapore marketing hub, a circuitous move that allowed the company to avoid its tax obligations on the profit. The practice, which Swan said went on between 2005 and 2014, allegedly saved the company hundreds of millions of dollars in taxes.
“For a long period of time, they’ve been involved in very aggressive transfer pricing, that is profit shifting — taking profits that they’ve made in Australia, shifting them to Singapore and then paying no tax in Singapore, or very little tax, and pretending that this is all done in the name of a marketing hub,” he said, adding that the company was forced by the Australian government to shell out $1.4 billion for its hefty back tax bill.
However, BHP Billiton has vehemently denied the veracity of the accusations, insisting that it has met its tax obligations in all jurisdictions, including Australia. It concedes that it is in dispute with the Australian government regarding some of its tax obligations. The company said that it has paid about $65 billion in taxes and royalties to the government over the course of the past 10 years and that the current amount in dispute is less than 2 percent of that amount.
“Our Australian adjusted effective tax rate, inclusive of corporate tax, Petroleum Resource Rent Tax, and royalties in financial year 2016 was approximately 57 percent,” a BHP Billiton spokesperson said. “Our global rate was slightly higher at 59 percent.”
Swan alleged that at the pinnacle of Australia’s mining tax debate, BHP Billiton was deceptive about the impact a higher tax would have on its mining operations, inflating figures while simultaneously funneling its profits through offshore tax havens.
“Some of us in this place remember 2010 and the mining tax debate. Two things really stand out in my mind. One was BHP and Rio Tinto frothing with outrage at the very suggestion they were paying too little tax during a period when Australia’s mineral resources (owned by the Australian public, not by them) were enjoying record high prices,” he told the Australian House of Representatives. “The other was the claim that the government’s proposed resource rent tax would destroy their operations, close projects, and kill jobs. One of the central arguments BHP used at the time was that they paid very high rates of corporate tax, and this somehow excused paying a historically low share of tax on the supernormal resource rents they were earning. Well, now we know the truth.”
Swan has said that BHP only paid taxes on a measly 10 percent to 12 percent of its Australian profits, all the while insisting that higher taxes would destroy its economic viability and hurt the economy. He also pointed out that the company paid no taxes in the UK, where it is co-owned. Ultimately, Swan called for an end to global tax avoidance, calling for better tax regimes with improved regulatory power.
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