Taxes paid in 2015
This report on taxes paid by Rio Tinto in 2015 shows the payments we make to governments in each of the main countries in which we operate, the payments in relation to specific projects, and other Group tax information.
Rio Tinto makes a significant contribution to public finances in the countries in which it operates around the globe. At a time when tax and transparency continue to be seen by the public as important topics of discussion, we are proud to produce this, our sixth annual report, disclosing how much tax we pay in each country. We publish this report on a voluntary basis, as part of our commitment to tax transparency. Rio Tinto believes that transparency makes good business sense.
The Rio Tinto Group paid US$4.5 billion of taxes during 2015, and a further US$1.6 billion on behalf of its employees. US$3.3 billion and US$0.8 billion of these totals respectively were paid in Australia. This represents a thirty two per cent decrease in total tax payments from 2014, which primarily reflects lower underlying earnings in 2015. Our total underlying tax charge for the year, including final payments due after 2015, was US$4.3 billion.
The stage of an operation within the mining life cycle is a significant factor influencing the type and amount of taxes paid by that operation. This report includes an explanation of this relationship, illustrated by case studies of two operations at different stages in their life cycle.
The disclosures contained in this report are consistent with Rio Tinto’s support for the principles of the Extractive Industries Transparency Initiative (EITI). Rio Tinto is an EITI supporting company and one of our employees sits on the EITI Board. We engage actively with EITI processes in the countries in which we operate.
Rio Tinto’s tax planning conforms to our corporate values and our global code of business conduct, ‘The way we work’. Integrity is a core business value, and we aim to act fairly, honestly and consistently in what we say and do.
2015 has been a year of significant change in the international tax landscape, as a result of the Organisation for Economic Co-operation and Development’s (OECD) project on Base Erosion and Profit Shifting (‘BEPS’). Rio Tinto agrees with the primary aims of BEPS, which are to prevent aggressive tax avoidance and to update tax rules on a consistent basis to cater for modern, globalised business structures.
We have engaged constructively with the OECD BEPS process. We accept the recommendation to share country by country reporting with tax authorities.
Care must be taken not to inadvertently damage the investment environment when implementing BEPS recommendations. We are also concerned about the potential for double taxation resulting from this initiative, and about the additional compliance costs that will result from actions being taken by governments and tax authorities in response.
Our group effective corporate income tax rate is reflective of the statutory corporate income tax rates in the countries in which we operate and we pay the vast majority of our group taxes in the countries in which we have mining and processing operations.
In the specific area of natural resource taxation policy, we believe that it is essential for tax policy and design to take into account the cyclical nature of the industry and to respect agreements under which investment capital has already been committed. For an industry that makes multi-decade investments, with significant up-front capital expenditure, the risk of fiscal instability will influence the global flow of capital and a country’s ability to attract and retain investment. Above all, tax law should never be retrospective.
Rio Tinto is committed to maintaining and enhancing its reporting and transparency procedures.
This report includes an analysis of our tax payments by project, in line with the EU Accounting Directive. The report also includes information recommended to be disclosed under the Australian Voluntary Tax Transparency Code and the UK Large Business Tax Compliance proposals. We welcome feedback on this report.
Chief Financial Officer