Rio Tinto has unveiled this year’s tax payments, stating it paid US$4.5 billion in tax and royalties globally.
In its latest 2015 tax report, Rio Tinto CFO Chris Lynch stated the company had paid an average corporate income tax rate of 29.9 per cent globally on its underlying earnings over the last five years.
“Rio Tinto continues to provide a significant direct benefit to the governments and communities where we operate. The US$4.5 billion we paid in taxes and royalties last year takes our total contribution to US$47.3 billion since 2010.”
However, the company did not provide the split between what is paid in tax and what is paid in royalties, although Lynch added, “We were the first global mining house to provide comprehensive tax and economic contributions data and in this, our sixth Taxes paid report, we are publishing more detail than ever before.”
“We are a strong supporter of the Extractive Industries Transparency Initiative (EITI) and the need for resources companies to appropriately disclose payments to governments around the world.”
The EITI is a collaboration between companies, civil society, and the governments of 51 countries for enhanced transparency and accountability.
Australia has committed more than $20 million in funding to the initiative since 2007, and is one of its largest and longest serving supporters.
Lynch went on to state, “Debates about tax rates and contributions are best served when factual information is provided. This is what we have set out to do with our annual Taxes paid reports.”
According to Deloitte, “The single biggest development mining companies will need to come to terms with are the OECD and G20 initiatives to address what is deemed to be inappropriate tax management.”
These initiatives have developed 15 base erosion and profit shifting (BEPS) action items to ensure clarity in multinational tax repayments and a coherent approach to tax.
Deloitte forecast an increased focus on transparency, with an end goal of creating a balanced international tax approach, which fundamentally changes tax implications for activities such as commodity trading, controlled foreign companies, procurement structures, and interest deductions amongst others.
“Although BEPS focuses on a number of specific issues, it is broadly accepted that it will have far-reaching consequences as tax scrutiny heightens on many fronts,” Deloitte said.
“Mining companies should expect a strong focus on tax compliance, substance and transfer pricing – and may face challenges related to their historical investment and trading structures, which have been developed over decades.”