23rd September 2016
In what some have called an attempt to ward off further tax regulations, BHP Billiton, the Anglo-Australian multi-national mining company based out of Melbourne has publicly released its tax reports in the wake of more aggressive inquests from the Federal government and the Australian Tax Office (ATO). The heightened scrutiny from law makers is a response to suspicions of tax minimisation and evasion practices by large Australian businesses.
For the second time, BHP released its Economic Contribution and Payments to Governments report, an audited account that complies with United Kingdom (UK) tax law. This is in accordance with Britain’s requirement of large companies to publicly release detailed reports of tax strategies. BHP, along with other large Australian companies operating in the UK are also included.
In 2016, BHP reported that it has paid US$3.7 billion in taxes, royalties, and other payments of a similar nature thus far. That amount is down by nearly half from what the company reported in 2015. Of this year’s payments, the report stated that US$2.5 billion was paid to the Australian government—US$1 billion in taxes, US$1.5 billion in royalties, and US$230 million in other payments. The company reported it paid US$5.25 billion to the Australian government the year before. The drop in tax money paid to the government compared to the previous year is attributed to the fall in global commodity prices to which, as a mining company, BHP’s earnings rely so heavily upon.
While the numbers in the report might seem big, the disclosures give hardly any additional data than is provided on the company’s financial statements. Only in the figures on the total taxes and royalties paid by country, government institution, and individual project can the real value of these disclosures be assessed. Although these disclosures adhere to the laws in the UK and have received independent audits, there are no figures from previous years available for scrutiny.
The report also included the names and some information of some of BHP’s subsidiaries in low-tax jurisdictions. This is the first time the report has divulge such information since the European Commission made the distinction for the incorporation of low tax-jurisdictions in 2015.
A few other large Australian companies also have publicly released their tax reports. Companies such as ANZ, National Australian Bank and others have released tax documents seemingly to stem the tide of more regulation coming from law makers.
Much like in the UK, the Australian government is starting to require the ATO to publicly disclose large company’s taxable income and the taxes they pay under its ‘tax transparency framework.’
The details in these reports, however, still lack transparency and in some cases were unaudited.