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Rio Tinto paid $US4.5b in taxes in 2015, reduced exposure in tax havens: report

Wednesday, 29 Jun 2016 08:57:34 | Thuy Ong

Rio Tinto said it is committed to transparency procedures. (Aly Song : Reuters)

Mining giant Rio Tinto paid a total of $US4.5 billion in taxes and royalties in 2015, according to its yearly tax report, and said it has reduced the amount of entities it has in tax havens.

The miner said 17 of its 600 controlled entities are located in tax havens but eight are dormant and either "in liquidation or scheduled for liquidation".

Of the remaining nine, four were established as investment holding companies with no tax benefits, three provide interest free loan funding to Rio's operating companies, and one holds investments for the benefit of a community in the region of a closed mine and has no tax benefits.

Another entity was established to provide in-country services prior to its acquisition by Rio Tinto and its business has been reduced to $US1 million turnover.

Rio Tinto and BHP Billiton have previously been accused of tax avoidance, and revealed to a Senate inquiry last April they both were being audited by the Australian Tax Office (ATO) over the activities of their Singapore commercial hubs.

In the report, Rio Tinto said all transactions with its Singaporean entities were undertaken at an arm's length basis and priced in accordance with OECD guidelines and local legal requirements.

"While we are satisfied these transactions align with tax requirements, differences of interpretation between companies and tax authorities can occur," the report said.

"In order to reduce the risk of dispute, we enter into Advance Pricing Agreements (APAs) which operate to agree with the price charged with tax authorities."

Rio Tinto said it had entered into APAs with the ATO, and authorities in Canada and Singapore.

The latest data from the ATO showed nearly 600 of the largest companies operating in Australia did not pay income tax in the 2013-14 financial year.

Rio Tinto said it defined a tax haven as a "a country with a general corporate income tax rate of 10 per cent or less", and said it has had an average corporate income tax rate of 29.9 per cent globally on underlying earnings over the past five years.

"We are a strong supporter... of the need for resources companies to appropriately disclose payments to government around the world," said Rio Tinto chief financial officer Chris Lynch.

In a statement, the company said it is committed to maintaining and enhancing its reporting and transparency procedures.

It spent almost $US18 billion buying goods and services from suppliers globally.

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