BHP Billiton settled its long-standing Oz tax dispute. Photo: Reuters

JOHANNESBURG – Global resources giant BHP Billiton yesterday agreed to settle a  long-standing transfer dispute with the Australian tax authority over commodity payments made to its Singapore marketing business.

The Australian Tax Office (ATO) had accused the world's biggest mining company of allegedly shifting profits from its iron ore sales to Singapore, its hub marketing between 2003 and 2018.

BHP Billiton yesterday said that it would pay A$529 million (R5.4 billion) in additional taxes for the income years 2003 to 2018 “with no admission of tax avoidance by BHP”. 

The JSE-listed company also said it had already paid A$328m of the amount, following receipt of amended tax assessments and in accordance with the ATO's normal practice.

Chief financial officer Peter Beaven said the payment was in addition to the more than A$75bn in Australian taxes and royalties that BHP had already paid over that same period.

“The settlement provides clarity for BHP and the ATO in relation to how taxes will be assessed and paid on the sale of Australian commodities,” Beaver said. 

“That certainly is good for business and for Australia.” 

In addition to the payment, the company would increase its ownership of BHP Billiton Marketing next year – which is the main company conducting BHP's Singapore marketing business – to 100 percent from 58 percent. 

The issue under dispute with the marketing hub was reportedly the margin on mark-ups for commodities sold to Singapore operations, where the tax rate had been legally reduced to zero or near zero on incentives from Singapore's government.  

The change in ownership was expected to result in all profits made in Singapore fully subject to Australian tax.

“The change in ownership will provide certainty for BHP and the ATO regarding the Australian taxation treatment of BHP's Singapore marketing business for future years,” the company said.

BUSINESS REPORT