BHP Billiton has revealed the true extent of its sweetheart deal with tax authorities in Singapore.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
The miner is paying an incredibly low effective tax rate of just 0.002 per cent - or effectively nothing - on the billions of dollars in sales that it directs through its "marketing hub" in the low-tax nation.
Between 2006 and 2014 the company booked profits of $US5.7 billion in Singapore, it said in a statement to the Senate inquiry into corporate tax avoidance.
It paid just $US121,000 in tax in Singapore – or $US15,000 a year - it said in its answers to questions on notice to the committee.
BHP was heavily criticised for ducking questions at the public hearings of the Senate committee when it appeared alongside fellow mining heavyweight, Rio Tinto.
Both companies have cut special tax deals with the Singaporean government to set up in the trade-friendly nation but BHP Billiton's answers suggest it got the more favourable treatment.
Through their marketing hubs, both companies "buy" Australia resources from their Australian arm and re-sell at a higher price to China and other Asian nations. Profits booked in Singapore are then virtually tax free for BHP.
Rio Tinto's Australia chief executive Phil Edmands told the committee that Rio's Singapore marketing hub earned $US719 million last year and paid $US44 million in tax.
"The Singapore government has granted BHP Billiton Marketing AG [Singapore] a tax incentive for its marketing activities. BHP Billiton Marketing AG was awarded this incentive for its contributions to the development of Singapore's commodities sector," BHP Billiton said in its statement to the committee.
"The tax incentive applies to the vast majority of BHP Billiton Marketing AG's income in Singapore. Accordingly, BHP Billiton Marketing AG has paid approximately US$121,000 of income tax in Singapore since 2006."
But BHP insisted that the Australian Tax Office still received revenue as a result of its Singapore operations. It said that $A945 million had flowed to the ATO in the same period of 2006 to 2014.
"It is important to note that 58 per cent of the profit which BHP Billiton Marketing AG earns in Singapore from the on-sale of commodities acquired from Australian entities controlled by BHP Billiton Limited is subject to tax in Australia at the company tax rate of 30 per cent," it said.
In response to questions from Greens leader Christine Milne, BHP said that it is currently under audit by the ATO in relation to transfer pricing and the so-called "top up tax" under Australia's Controlled Foreign Company rules.
Since establishing in Singapore, BHP owes the ATO an additional $522 million as a result of tax assessments.
That consists of $301 million in additional tax, interest of $145 million and penalties of $76 million.
"BHP Billiton has objected to these assessments," the company said.
BHP said it employs 400 people in Singapore.
