Tax
Taxes paid in 2010
A report on the economic contributions made by Rio Tinto to public finances
As part of our commitment to transparency, Rio Tinto has decided to redesign the way we report tax payments to governments. This new report brings together information on the payments we make to governments in each of the main countries in which we operate, as well as the taxes and earnings of business units and other tax information.
Rio Tinto paid a record amount of US$7.4 billion of taxes during 2010, representing a 54% increase on the prior year. Our total tax charge for the year, including final payments due after 2010, was US$9 billion, which represents 38% of our profit before tax. We are proud to be making a significant contribution to public finances in all the countries in which we operate. We are however concerned about ongoing debates in a number of countries to increase tax on natural resources, as this does not take into account the cyclical nature of this industry or the agreements under which investments were initially made. 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.
We have chosen through this report to be transparent in disclosing payments we made to individual governments in 2010 and we support the principles of the Extractive Industries Transparency Initiative (EITI).
Given the existence and success of the EITI as well as its global reach, we do not believe mandatory rules for disclosure of payments to governments are necessary. However, where such rules are envisaged, we believe governments should use EITI as a starting point and work together to adopt a consistent and comparable global approach, which establishes consistent disclosure requirements.
We believe any mandatory rules need to remain focussed on the ultimate objectives, both for governments and for companies: good tax governance, accountability, transparency, and the fight against corruption.
The preparation of financial statements on a country-by-country basis (as distinct from the EITI approach of disclosing payments to governments) would not contribute to these objectives. In view of this, and the implementation challenges and material compliance costs that would be incurred, we do not support the introduction of such requirements.
This report demonstrates that effective disclosures can be made by businesses on a voluntary basis. In a number of areas, including sustainable development reporting, voluntary transparency has been shown to encourage innovation in reporting, including through proactive engagement with the stakeholder audiences to develop reporting models. At Rio Tinto we are committed to maintain and improve our reporting and transparency, and we welcome feedback on the format of this report.
Guy Elliott
Chief Financial Officer
20 May 2011
