Australian authorities pursue Rio Tinto and BHP Billiton on alleged tax avoidance

7th Apr 2015 12:10

Anglo Australian miners BHP Billiton and Rio Tinto are reportedly being pursued by the Australian Taxation Office for funnelling billions of dollars in profits from iron ore sales through companies that pay almost no tax in Singapore.A report in the Australian Financial Review on Tuesday, which cited a source with direct knowledge of the disputes, said the Singapore arrangements save the two mining giants more than £382m a year in Australian tax.The AFR 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, which are Australia's largest taxpayers, 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.Augustin Eden, research analyst at Accendo Markets noted that BHP Billiton is Australia's largest taxpayer having paid circa $8bn in 2014 while Rio Tinto, being a more diversified company, has had other positive developments that make it attractive to investors such as a new agreement in principle with the Mongolian government on the Oyu Tolgoi mine and a massively oversubscribed $560m share buyback."Share buybacks are usually perceived by markets as positive, causing the share price to jump upwards and this was a textbook case. Australia needs its miners, at least or the time being," added Eden.