In one of the biggest tax payouts in Australian history, mining giant Rio Tinto will pay close to $1 billion to settle all disputes with the Australian Taxation Office.
The settlement resolves a long-running controversy with the ATO over transfer pricing for the marketing of all products between Australia and Singapore, including iron ore and aluminium, for 2010 to 2021 and the future period to 2026.
Deputy Commissioner Rebecca Saint hailed the settlement as “a very good outcome for the Australian tax system”.
“The resolution of these matters means that ordinary Australians can have confidence that even the biggest companies are held to account to pay their tax due.”
Rio Tinto has also reached an agreement with the Singapore tax authority in relation to transfer pricing for the same periods so that it is not subject to double tax.
The agreement also resolve a dispute relating to interest on an isolated borrowing used to pay an intragroup dividend in 2015.
Under the agreement, Rio Tinto will pay an additional $613 million in tax for the twelve-year period of 2010 to 2021, $55 million in interest and $22 million in penalties. The ATO said the settlement, like all large corporate settlements, had been reviewed by a former Federal Court judge to ensure a “fair and reasonable outcome”.
Rio Tinto CFO Peter Cunningham said the agreement provided future tax certainty concerning the activities of its Singapore marketing hub.
“We are glad to have resolved these longstanding disputes and to have gained certainty over future tax outcomes relating to our Singapore marketing arrangements. Rio Tinto remains committed to our commercial activities in Singapore and the valuable role played by our centralised commercial team,” Cunningham said.
Rio Tinto was issued amended assessments of $447 million for iron ore marketing between 2010 and 2013 in 2017; $86 million for aluminium marketing between 2010 and 2016 in 2020; and $738 million for the intragroup dividend financing matter between 2015 and 2018 in 2021.
Rio Tinto agreed to pay an additional $378 million in tax on the original amended assessments. The company has paid nearly $80 billion in tax and royalties in Australia over the period at issue.
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