Tax stoush costs Rio $1bn

Mining giant Rio Tinto has agreed to hand over $613 million to end several long-running disputes with the Australian Taxation Office, one of the largest tax settlements in the country’s history.

The two parties have been at loggerheads since ATO issued amended assessments demanding Rio pay $447 million for iron ore marketing in 2017, $86 million for aluminum marketing in 2020 and $738 million in interest on an isolated borrowing used to pay an intragroup dividend in 2021.

The matters in question cover tax paid between 2010 and 2021.

A part of the peace deal, Rio has agreed to fork out $613 million in extra tax for the 12 years in question.

That amount is in addition to the $378 million the company has already handed over in respect of the initial assessments issued.

It takes the total payout to $991 million, including $77 million in interest and penalties.

Over that same period, Rio Tinto paid almost $80 billion in tax and royalties in Australia; retaining the top spot as the country’s biggest taxpayer for the past two consecutive years.

In a statement, Rio said the agreement ensured the company was not subject to double taxation across Australia and Singapore.

Rio Tinto chief financial officer Peter Cunningham said the company was glad to have resolved the disputes and gained certainty over its Singaporean marking arrangements.

Separately, the company has also reached an agreement with ATO and the Inland Revenue Authority of Singapore relating to the transfer pricing for the marketing of all products between Australia and Singapore, including iron ore and aluminum.

Deputy Commissioner Rebecca Saint said the settlement was a good outcome for the tax system, locking in future tax outcomes and ensuring ordinary Australians could have confidence that even the biggest companies would be held to account to pay their tax due.