The Australian Taxation Office (ATO) today confirmed that it has reached a settlement with mining giant BHP to resolve a transfer pricing dispute relating to the multinational’s transfer pricing treatment of commodities sold to its Singapore marketing hub.
Under the settlement, BHP will pay additional tax of AUD 529 million (USD 386 million) to resolve the transfer pricing dispute, which coveres tax years 2003–18.
Also, from July 2019, BHP Group Limited will increase its ownership of BHP Billiton Marketing AG, the main company conducting BHP’s Singapore marketing business, from 58 percent to 100 percent. The change in ownership will result in all profits made in Singapore in relation to the Australian assets owned by BHP Group Limited being fully subject to Australian tax.
Thus, BHP’s Singapore marketing arrangements for future years will continue to be located in Singapore and remain an important part of BHP’s value chain and will also be within the ‘low risk’ or ‘green zone’ for offshore marketing hubs as set out in the ATO’s Practical Compliance Guideline 2017/1, the company said.
The mining giant had originally been assessed with over AUD 1 billion (USD 729 million) in additional taxes.
“While confidentiality provisions prevent us from commenting on specific details of the settlement, we are confident that a fair and reasonable outcome has been achieved for the Australian community,” said Deputy Commissioner Jeremy Hirschhorn.
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