BHP has settled a long-running tax dispute with the Australian Taxation Office (ATO) over its marketing operations in Singapore.
The transfer pricing dispute pertains to the amount of tax the company owed to the government over the sale of Australian commodities to its Singapore marketing business.
Under the terms of the settlement agreement, BHP will pay a total of around A$529m ($387.45m) in additional taxes on income for the period between 2003 and 2018.
Of the total amount payable, the company has already paid A$328m ($240.23m) after the ATO issued amended tax assessments.
As part of the settlement, the company has not admitted to the allegations of tax avoidance.
BHP chief financial officer Peter Beaven said: “This is an important agreement and we are pleased to resolve this longstanding matter.
“The A$529m payable under the settlement is in addition to the more than A$75bn ($54.93bn) in Australian taxes and royalties that has already been paid by BHP over that same period.
“The settlement provides clarity for BHP and the ATO in relation to how taxes will be assessed and paid on the sale of Australian commodities.”
The corporate tax rate in Singapore is 17% and is much lower than that of Australia, ABC reported.
ABC added that mining firms sell iron ore and coal produced in Australia to their marketing hubs in Singapore, which are thereafter put up for sale to China and other countries.
BHP stated that it will raise its ownership of BHP Billiton Marketing, which conducts the company’s Singapore marketing business, from the existing 58% to 100%.
According to the company, the change in ownership will make all profits realised in Singapore from its Australian assets fully subject to Australian tax.
The change also aims to introduce stability to the ATO’s taxation of BHP’s Singapore marketing business for the future.