Mining giant Rio Tinto has been hit with an additional tax bill of $447 million over a dispute on transfer pricing of commodities to its Singapore marketing hub.
The demand from the Australian Tax Office, comprising of additional tax of $379 million plus interest of $68 million, is a result of amended income tax assessments issued for the four-year period from 2010 to 2013.
The global miner, along with other multinationals including rival BHP Billiton, Apple and Google, has been under investigation by the ATO over the use of Singapore marketing hubs to allegedly reduce their tax bills.
The tax office has accused the miners of selling commodities such as iron ore to their own companies at a low price, in order to shift profits to low tax havens, but the companies have defended the practice, saying most of their Australian profits continue to be taxed here.
Rio said the ATO had confirmed that the current tax demand did not relate to any tax avoidance schemes, and no penalties were payable.
The company, however, says it will challenge the assessments but will pay 50 per cent of the total amount to the ATO in April.
"Rio Tinto considers that its pricing is in accordance with the internationally recognised OECD guidelines and Australian domestic law," it said in a statement on Thursday.
It also said it will seek double taxation relief in accordance with the Australia-Singapore tax treaty, as the assessments will result in double taxation.
The miner said it had paid $25.5 billion by way of taxes and royalties in Australia during the four-year period.
A similar tax dispute between the tax office and rival BHP Billiton escalated in September 2016, after the miner was issued a near-$1 billion tax claim on Australian minerals sold through its controversial Singapore marketing hub.
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