Australia chases BHP, Rio Tinto on Singapore tax shelter

[MELBOURNE] Australia is pursuing global miners BHP Billiton and Rio Tinto for shifting billions of dollars in iron ore profits through marketing hubs in Singapore that pay almost no tax, the Australian Financial Review reported on Tuesday.

The Australian Taxation Office was chasing multibillion dollar claims against each company, the newspaper said, citing a source with direct knowledge of the disputes.

The Singapore arrangements save the two companies more than A$750 million (S$772.5 million) a year in Australian tax, it said.

The newspaper said BHP declined to comment on whether it received a tax bill tied to its Singapore hub, while Rio Tinto said it had not received a tax bill.

Both companies say their Singapore operations were not set up to cut tax but to serve their customers better, while the Australian tax office considers the arrangements tax avoidance.

"It is a big issue. It's huge," Tax Commissioner Chris Jordan told the Australian Financial Review in March, referring to tax audits of more than 15 marketing hubs used by resource companies. "There's a lot of funds that have been transferred into hubs for the so-called marketing, shipping, you know sales, supposedly, that are being carried on." The newspaper said sources insisted that Rio Tinto's Singapore-related earnings, which flow to a UK company, were in dispute.

Close to A$1 billion in base tax was at issue from 15 marketing hub cases, the tax office said, according to the newspaper.

REUTERS