BHP BILLITON PLC - BHP settles longstanding transfer pricing dispute

BHP settles longstanding transfer pricing dispute

BHP Billiton Plc
Registration number 3196209
Registered in England and Wales
Share code: BIL
ISIN: GB0000566504



NEWS RELEASE
Release Time       IMMEDIATE
Date               19 November 2018
Release Number     24/18




BHP settles longstanding transfer pricing dispute

BHP has reached an agreement with the Australian Taxation Office (ATO) to settle
the transfer pricing dispute relating to its marketing operations in Singapore.

The settlement fully resolves the longstanding dispute between BHP and the ATO for
all prior years, being 2003 to 2018, with no admission of tax avoidance by BHP, and
provides certainty in relation to the future taxation treatment.

The dispute related to the amount of Australian tax payable as a result of the sale of
BHP’s Australian commodities to BHP’s Singapore marketing business.

As part of the settlement, BHP will pay a total of approximately A$529 million in
additional taxes for the income years 2003 to 2018. BHP has already paid A$328
million of this amount, following receipt of amended tax assessments and in
accordance with the ATO’s normal practice.

In addition, from July 2019, BHP Group Limited will increase its ownership of BHP
Billiton Marketing AG, which is the main company conducting BHP’s Singapore
marketing business, from 58 per cent to 100 per cent. The change in ownership will
result in all profits made in Singapore in relation to the Australian assets owned by
BHP Group Limited being fully subject to Australian tax.

The change in ownership will provide certainty for BHP and the ATO regarding the
Australian taxation treatment of BHP’s Singapore marketing business for future
years.

Peter Beaven, BHP Chief Financial Officer, said “This is an important agreement and
we are pleased to resolve this longstanding matter.”

“The A$529 million payable under the settlement is in addition to the more than A$75
billion 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. That certainty is good for
business and for Australia.”

BHP’s marketing operations will continue to be located in Singapore and remain an
important part of BHP’s value chain. These marketing operations contribute to BHP’s
ability to compete in the global marketplace and to the value of Australia’s natural
resources. Being located in Singapore provides BHP with access to a highly skilled
global trading centre for its commodities in close proximity to its customer base.

Additional Information

The dispute between BHP and the ATO related to the amount of Australian tax
payable as a result of the sale of Australian commodities to BHP’s Singapore
marketing business. The ATO had issued amended assessments for A$661 million
primary tax (A$1,042 million including interest and penalties) for the income years
2003 to 2013.

As a result of the change in ownership of BHP Billiton Marketing AG, to be 100 per
cent owned by BHP Group Limited, BHP’s Singapore marketing arrangements for
future years will be within the “low risk” or “green zone” for offshore marketing hubs
as set out in the ATO’s Practical Compliance Guideline 2017/1 and all profits made in
Singapore in relation to the Australian assets owned by BHP Group Limited will be
fully subject to Australian tax.




Further information on BHP can be found at: bhp.com



Sponsor: UBS South Africa (Pty) Limited


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