Tuesday 19th Dec, 2017

ATO looks to tackle major miners’ Singapore hubs

Photo: Shutterstock
Photo: Shutterstock

The Tax Office is reportedly preparing legal action against Rio Tinto and BHP Billiton over their controversial marketing hubs in Singapore, which are primarily used to minimise the mining giants’ tax bill.

According to a report in The Australian this week, Australia’s tax commissioner Chris Jordan labelled the practice used by BHP and Rio should be considered by the court system.

“I think eventually there’ll need to be a court case to resolve marketing hubs, and unfortunately it could risk being very specific to the companies, but we’re trying to see if we can establish some principles,” Jordan was quoted as telling the paper in an exclusive interview.

In what is commonly referred to as the “Singapore sling,” the mining companies sell their iron ore to marketing hubs in Singapore, and then mark them up for resale to their end customers, often after a significant mark-up in price.

This allows the miners to take advantage of Singapore’s lower corporate tax regime.

A BHP spokesperson reportedly shot back at the implication the miners were doing something wrong.

“We do not agree with the ATO’s position and intend to continue to defend our position, including in court if necessary,” the spokesperson was quoted.

The defence of BHP’s tax behaviour came in the same week BHP boss Andrew Mackenzie called for tax cuts in Australia, and highlighted the $66 billion the company says it has paid in taxes and royalties in Australia over the past decade.