As in previous years, this report on taxes paid by Rio Tinto in 2013 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 net earnings of business units and other Group tax information.
This report demonstrates the significant contribution Rio Tinto makes to public finances in the countries where it operates around the globe. Tax transparency also assists in the fight against corruption and enhances the scope for communities and citizens to hold their governments to account.
The Rio Tinto Group paid US$7.5 billion of taxes during 2013, and a further US$1.9 billion on behalf of its employees. US$5.7 billion and US$1.1 billion of these totals respectively were paid in Australia. This represents a nineteen per cent decrease in total tax payments from 2012, which primarily reflects timings of instalment payments of corporate income taxes with lower payments in 2013 in respect of 2012 profits. Our total underlying tax charge for the year, including final payments due after 2013, was US$9.1 billion, which represents forty seven per cent of our underlying profit before all taxes.
The disclosures contained in this report ensure that the Group remains transparent about its payments to governments and are consistent with Rio Tinto's support for the principles of the Extractive Industries Transparency Initiative (EITI). Rio Tinto was a founding member and continues to engage actively with EITI processes in the countries where it operates.
As part of its commitment to showing leadership in tax transparency, Rio Tinto publishes this report on a voluntary basis because the Group believes that transparency makes good business sense. Rio Tinto is leading the way in this area. We are, however, concerned about the additional compliance costs associated with a proliferation of new regulatory initiatives in relation to worldwide tax reporting that have recently been introduced, or are under consideration, by governments.
Rio Tinto encourages governments to work together to adopt a consistent global approach and establish disclosure requirements and thresholds that are proportionate. Otherwise, global companies will face multiple reporting requirements. A multitude of different reporting formats is unlikely to result in greater clarity or comparability and will therefore impose significant additional costs upon companies, with little or no public benefit. Mandatory reporting must remain focused on the ultimate objectives of disclosure requirements for both companies and governments: good tax governance, accountability, and transparency.
Rio Tinto also welcomes constructive debate on natural resource taxation policy as part of the overall contribution to economic development that responsible mining investments can make. 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 improving its reporting and transparency procedures, and welcomes feedback on this report.
Chief Financial Officer