Miner bows to pressure over concerns about avoidance by multinationals
Sydney – Rio Tinto has cut the number of its companies that operate in tax havens after a review prompted by growing concerns over possible tax avoidance by multinationals.
The Anglo-Australian mining group said 17 of its 600 controlled entities were resident in tax havens in 2015, three fewer than in 2014. Of these, eight entities are dormant companies, which are either in liquidation or scheduled for liquidation, according to an annual report by Rio, Taxes Paid in 2015.
Rio defines a tax haven as a country with a general corporate tax rate below 10 per cent. Chris Lynch, Rio’s chief financial officer, said in a foreword to the report that the company supported global efforts to prevent aggressive tax avoidance and accepted OECD recommendations for companies to provide country-by-country tax reporting.
But he warned there was potential for double taxation and additional compliance costs under the OECD’s base erosion and profit shifting (BEPS) recommendations. “Care must be taken not to inadvertently damage the investment environment when implementing BEPS recommendations,” said Mr Lynch.
Rio is in dispute with the Australian Taxation Office over its use of a company based in Singapore, which markets iron ore throughout Asia. Under a deal agreed with the Singapore government, this entity is subject to incentives that result in a corporate income tax rate below 10 per cent.
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