Paying our dues

You’re responsible for a lot of tax returns?
We do fill in a lot of tax returns around the world – in the US for instance about 5,000 forms for about 100 companies – and these are completed by computer systems and sometimes manually. But there is a lot more to Tax management than this. Mining companies are unique in the number of types of taxation they are subject to. Income tax makes up only about half of what we pay.

What are the other forms of taxation?
Because we’re a resource company, we pay significant amounts of tax in royalties [a consideration for the right to mine], as well as the more usual property tax, employment taxes and customs and excise duties.

What amounts are involved?
In 2005 the full amount of taxes directly or indirectly paid by the Group in corporation tax, mineral royalties, employee taxes, social security contributions and customs duties was US$2bn. In many countries where Rio Tinto operates tax payments are largely based on the preceding year’s profits. Where this is the case, payments will not catch up with the increased profits of 2005 until this year.

What is your biggest obstacle?
It is certainly a challenge being in as many international situations as we are. Not only do we operate in about 20 countries, we have exploration, marketing or other activities in another 20 countries. These multiple jurisdictions mean we have to be familiar with very many tax regimes and be able to deal with the issues that arise. The Group is now entering additional jurisdictions like Madagascar and Guinea in west Africa. In the same vein, I never dreamt I would one day have to become familiar with the provisions of the Mongolian tax code.