Australia to propose tax incentives for critical minerals
The proposed law will set up a tax incentive worth 10% of relevant processing and refining costs for 31 critical minerals.
Rio Tinto said on Wednesday it has reached an agreement with the Australian Taxation Office (ATO), resolving a long-standing transfer-pricing dispute related to the Anglo-Australian mining giant’s marketing hub in Singapore.
The dispute arose back in 2015 after Rio and its rival BHP Group were accused of shifting billions of dollars in iron ore profits through marketing hubs in Singapore that pay almost no tax.
Singapore, despite having few natural resources of its own, has been able to use a tax-incentive program, combined with its strong financial sector and its large port to attract dozens of commodity companies to set up on the tiny island.
As part of the agreement, Rio said it will pay an additional tax of A$613 million ($423.22 million) to the ATO. The agreement covers transfer pricing related to commodities like iron ore and aluminum for twelve years between 2010 and 2021 and extends to 2026.
“This settlement is a very good outcome for the Australian tax system,” ATO deputy commissioner Rebecca Saint said, adding that the settlement was one of the largest in the country’s tax history.
“The settlement locks in future tax outcomes, providing certainty going forward. This means that additional profits from the sale of Rio’s Australian-owned commodities will be taxed in Australia in the years to come.”
Rio said it has also reached an agreement with the Inland Revenue Authority of Singapore, ensuring that it won’t be subject to double taxation.
The company added it also resolved a dispute over interest paid on a loan used to declare a dividend back in 2015.
($1 = 1.4484 Australian dollars)
(By Harish Sridharan; Editing by Uttaresh.V)
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