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Tech & Science BHP loses tax case over Singapore marketing hub, hit with $125 million bill

06:20  11 march  2020
06:20  11 march  2020 Source:   abc.net.au

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The profits BHP hasn’t paid tax on were made by its marketing arm on the sale of commodities BHP ’s 15-year tax arrangement with the Singapore government expires in July 2020, after which The group pays a 5% tax in the Southeast Asian country. Marketing hubs set up by mining giants to

BHP Billiton is contesting 2 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 "The Singapore Government has granted BHP Billiton Marketing AG a tax incentive for its marketing activities.

BHP Billiton is expected to announce a massive $10 billion loss when it unveils its full-year results on Tuesday, Aug 16. © (AAP Image/Tracey Nearmy) BHP Billiton is expected to announce a massive $10 billion loss when it unveils its full-year results on Tuesday, Aug 16.

BHP has lost its High Court appeal in a tax case over its controversial Singapore marketing hub, leaving it with a $125 million tax bill.

The case could set a precedent with implications for other corporate giants, as tax authorities globally continue to question multinational marketing-hub tax structures.

The High Court rejected BHP's argument that its British and Australian arms are not "associates" for the purposes of tax laws.

The decision brings to an end a long-running dispute between the Australian Taxation Office (ATO) and the mining giant over the use of its Singapore marketing arm.

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BHP Billiton ( BHP .AX) (BLT.L) will not move its low tax -paying Singapore marketing hub even if Australia goes ahead with plans to cut corporate taxes , Chief Executive Andrew Mackenzie said on Thursday. BHP 's Singapore office is the focus of a long-running fight with Australia's tax office, which.

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BHP had also been hit with tax bills spanning 11 years that totalled $661 million in primary tax, which is settled with the ATO in 2018.

How the dual-listed tax structure works

The British side of BHP sells coal to the group's marketing hub in Singapore.

Due to the company's dual-listed structure, BHP Australia owns 58 per cent of the Singapore operation, while its sister company in Britain owns 42 per cent.

BHP agrees that under controlled foreign corporation (CFC) rules it must pay Australian tax on the 58 per cent share of the income the Australian arm earns from Singapore.

But it fought the ATO over whether it must also pay tax on the share of the income the British arm earns from its sales of Australian goods, including Hunter Valley coal, through Singapore.

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MELBOURNE (Reuters) - BHP Billiton is contesting A2 million (S4.42 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.

Its 2015 tax bill hit million , but still remains a fraction of its overall profit. Google is among a number of technology companies - including Apple, Microsoft, BHP Billiton and Rio Tinto - that are under audit by the Australian Taxation Office for their use of marketing hubs in Singapore .

After BHP had won the case in the Administrative Appeals Tribunal (AAT), the full Federal Court upheld an appeal from the ATO, leaving the mining giant with a bill for US$87 million in primary tax dating back to 2006.

The appeals court held its Australian and British arms were associates and therefore subject to what the company claimed was a "top-up tax" in Australia under Controlled Foreign Companies rules.

The High Court today upheld that view, finding that its Australian entities "sufficiently influenced" each other to be considered associates.

While the primary tax bill is $125 million, BHP said in its 2019 annual report that the ATO had not, at the time, determined that the Group is liable for any penalties.

Use of marketing hubs under fire

Several countries are already taking tough measures to prevent multinationals from shifting profits into jurisdictions where they pay little or no tax.

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BHP has settled a tax dispute over its Singapore marketing hub and will pay the ATO 9 million and change the hub 's ownership structure. BHP 's decision to strike a 9 million settlement with the Australian Tax Office over its Singapore marketing hub sets a precedent for other mining and

Mining giant BHP Billiton have copped a massive billion tax bill from the Australian Taxation Office over a ATO is after taxes dating to 2003, including from offshore marketing hub . BHP has operations in Singapore that channel its iron ore sales. The mining company have said it will fight the

Countries such as France and the UK have already imposed taxes on revenue rather than profit, and there are worldwide discussions about a global minimum tax.

In Australia, the use of marketing hubs has been a source of common dispute between the ATO and a raft of companies.

In 2018, after the transfer pricing dispute settlement, BHP ended up paying the ATO $529 million, calculated over the 2003 to 2018 financial years, and without any penalties attached.

The low-tax nation of Singapore has also long been in favour of tech giants such as Google and Facebook.

Google reported a corporate tax expense of only $26.5 million in Australia for the 2018 financial year, and Facebook paid $11.8 million, despite earning billions in advertising revenue.

But late last year, Google said it had settled its long-running tax dispute with the ATO with a payment of an additional $481.5 million on top of its previous tax payments, covering the period from 2008 to 2018.

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