Photo by: Reuters
PERTH (miningweekly.com) – Media reports on Monday emerged that Western Australian Premier Mark McGowan would seek royalty payments of up to A$300-million from diversified miner BHP, which the state reportedly believed was underpaid over a period of 12 years.
Broadcaster 6PR reported that the Western Australian government was of the belief that the mining company artificially understated its iron-ore sales prices, which resulted in lower taxes.
The claims date back to 2004, with the iron-ore sold to customers in Japan and China, with the iron-ore sold through BHP’s Singapore marketing hub.
BHP has acknowledged the government query, noting in a statement that the Mines Department had recently queried a long-standing and historically accepted deduction for costs related to the sale of Western Australian iron-ore.
“The long-standing deduction has been consistently audited and accepted by the Mines Department as part of BHP Western Australian iron-ore royalty calculations. It is concerning that previously audited and accepted payments to the government are now being revisited and BHP is working with the Mines Department to resolve this matter,” the company said.
The Western Australian investigation comes only months after the Australian Taxation Office (ATO) reached a settlement agreement with BHP relating to its marketing operations in Singapore.
As part of the settlement, BHP agreed to pay A$529-million in additional taxes for the years 2003 to 2018, without admission of tax avoidance. The A$529-million was in addition to the more than A$75-billion in Australian taxes and royalties that has already been paid by BHP over that same period.
BHP in May last year also reached an out-of-court ‘in principle’ agreement over a A$288-million coal royalty dispute with the Queensland Treasury, after the Queensland Office of State Revenue issued the miner with a reassessment of A$186-million in royalties and a further A$102-million in interest, relating to coal sales undertaken between July 2005 and December 2012.
BHP previously announced that from July this year, BHP Group Limited would increase its ownership of BHP Billiton Marketing, which is the main company conducting the marketing business in Singapore, from 58% to 100%.
The miner said that the change in ownership would result in all profits made in Singapore in relation to Australian assets owned by BHP being fully subject to Australian tax.
The marketing operation would continue to be located in Singapore and would remain an important part of BHP’s value chain, the company said, as it contributed to BHP’s ability to compete in the global marketplace, and to the value of Australia’s natural resources.