Taxes & royalties

In 2006, our direct tax and royalty charge was US$ 4,195 million, a 35 per cent increase from 2005.  Although federal governments collect most of these payments, local and regional governments received nearly a third of the total. 

How these payments are redistributed depends entirely on the fiscal and administrative structure of the host countries.  Our analysis only captures where the tax payments are made, and not the internal redistribution of revenues that takes place within governments.  For this reason, the ultimate effect of these payments at the local level is likely to be underestimated. 

In many countries where Rio Tinto operates, tax payments are largely based on the preceding year's profits.  Consequently, there is an annual lag between taxes charged and taxes paid.  As a result, the total tax paid in 2006 does not equal the charge figure reported above, but reflects the company's strong profit growth experienced in 2005.  The full amount of taxes paid directly and indirectly by the company in 2006 was $3,795 million, nearly twice the tax payments made in 2005 of $2,002 million (Figure 11.7).
Geographic distribution of taxes and royalties paid in 2006*