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Update: BHP faces A$522m tax bill on Singapore marketing hub

[MELBOURNE] BHP Billiton is contesting A$522 million (S$544.8 million) in Australian tax bills on its Singapore marketing operations up to 2010, after having paid almost no tax in Singapore since 2006, the global miner told an Australian Senate panel.

The figures were released on Monday by a Senate committee that is investigating corporate tax avoidance. BHP was forced to send written responses to the panel after refusing to disclose the figures at a hearing on April 10.

The company revealed that between 2006 and 2014 its Singapore marketing business earned profits of US$5.7 billion, on which it paid just US$121,000 in tax in Singapore. "The Singapore Government has granted BHP Billiton Marketing AG 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," the company said in its response to the Senate inquiry.

However BHP highlighted that its Singapore marketing hub is 58 per cent owned by BHP Billiton, which is dual-listed in Australia and Britain, and paid tax on those earnings also in Australia. "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," BHP said.

The company paid A$945 million in tax in Australia on its Singapore marketing operation earnings between 2006 and 2014.

The A$522 million in tax bills it faces from Australia include contested tax plus interest and penalties owed on transfer pricing, the price at which BHP's Australian entities sell commodities they mine to the Singapore marketing business.

It also includes tax, interest and penalties the Australian government says is owed from the marketing hub under controlled foreign company rules. "BHP Billiton has objected to these assessments," the company said.

The company said it is also being audited for taxes paid between 2009 and 2013 under the transfer pricing rules and taxes paid between 2011 and 2014 under the controlled foreign company rules, a period when it was achieving record profits.

BHP, Australia's biggest single taxpayer, and rivals Rio Tinto and Glencore Plc and technology giants like Apple and Google have been targeted by the senate inquiry and the tax office for avoiding tax in Australia.

Rio Tinto revealed at the tax hearing that it pays a 5 per cent tax rate on its Singapore marketing operations.

REUTERS