BHP Billiton refuses to reveal tax bill estimate to Senate committee

BHP Billiton executives have infuriated a Senate committee by refusing to say how much the Australian Taxation Office (ATO) believes it is owed because of the way the mining giant channels profits through a marketing hub in Singapore.

They also declined to say how much tax it paid in that country.

The Senate economics references committee has now demanded BHP Billiton answer its questions. Continued refusal could ultimately result in the company being held to be in contempt of the Senate.

Labor, Coalition and Greens members of the committee inquiring into corporate tax avoidance unanimously agreed that the company be forced to answer the questions – and denied BHP’s claim that the information was commercial in confidence.

The committee’s chairman, Labor senator Sam Dastyari, said the unanimous view of the committee was that “BHP’s failure to give answers and basic information was far from satisfactory … and their arguments about it being commercial in confidence were undermined by Rio Tinto sitting beside them at the hearing and being prepared to give the same information”.

“It is completely unacceptable they are refusing to say how much the ATO has asked them to pay. No one will accept this. It beggars belief,” said the Greens leader, Christine Milne.

The independent senator Nick Xenophon said: “ ‘The Big Australian’ has now been revealed as the big chicken when it comes to being upfront with Australian taxpayers. How could this information about a possible tax liability not be relevant to BHP’s continuous disclosure obligations to shareholders?”

The president of corporate affairs for BHP Billiton, Tony Cudmore, confirmed that the operations of the company’s Singapore-based marketing hub were being audited by theATO, but the company refused to say whether the ATO had given it an estimate of the tax it believed was owing, or how much the estimated bill might be.

BHP’s head of group tax, Jane Michie, said the company was in talks with the ATO about “the correct transfer pricing methodology regarding the sale of commodities to the Singapore hub … It comes down to pricing … have we priced the commodities we sell to Singapore correctly,” she said.

Asked whether the tax office had issued BHP with a position paper – in effect an assessment of the tax the ATO believes should be paid – Michie said: “We would prefer not to provide a running commentary regards where we are at ... we would prefer not to answer that question, thank you.

“We firmly believe in the position we have adopted. The tax office can state what their position is, but we firmly believe in our position, so in that sense the tax office numbers are not really relevant to us,” she said.

Cudmore said: “We believe this is a competitively sensitive matter.”

Rio Tinto revealed it had in the past been asked to pay extra tax in relation to its Singapore marketing operations and also declined to reveal how much, on commercial grounds.

“We received a relatively modest assessment in relation to an early period … we approached the Australian tax office to ask for agreement in relation to our pricing … once we reached an agreement there was a small amount that needed to be paid and we have now paid that,” said Rio Tinto’s general manager of taxation, Ann-Maree Wolff.

Rio’s Australian managing director, Phil Edmands, also acknowledged his company’s Singapore hub was being audited by the ATO, but said no “position paper” had been received.

Edmands told the inquiry the miner’s Singapore hub made a $790m profit and paid a 5% tax rate in 2014.

BHP refused to say how much profit it generated in Singapore or the tax rate it paid there, again citing commercial sensitivity.

The Australian Financial Review has reported both companies were being pursued by the ATO over tax allegedly owed because they reported billions of dollars of profit in their Singapore “marketing hubs” upon which they paid very low tax rates.

Michie said BHP did not do “aggressive tax planning. We are not inviting the big four [accounting firms] in and say: ‘Pitch your aggressive tax plans to us.’ ”

The ATO confirmed it was auditing a number of marketing hubs used by resource companies.