The High Court of Australia has dismissed an appeal by BHP Group against a ruling that the global miner owed taxes on profits made by its Singapore-based marketing arm, currently worth about $87 million.
The dispute was over whether BHP should pay so-called “top-up tax” in Australia on the profits made by its Singapore marketing hub from selling coal from the Mt Arthur mine in Australia, which is owned by the UK side of BHP’s dual-listed structure, BHP Group Plc.
The High Court upheld a Federal Court ruling that commodities acquired from Australian subsidiaries of BHP Group Plc are subject to top-up tax in Australia under “controlled foreign company” rules.
In its 2019 annual report, BHP estimated the total primary tax subject to dispute for the 2006-2018 income years at $87 million.
The decision marks the latest loss for the miner over the treatment of profits from commodities that are sold out of its Singapore hub.
BHP has argued that its marketing hub in low-tax Singapore creates value, such as by negotiating specialised coal blends, for which extra profits should not be subject to additional tax.
The tax office argues that profits on commodities dug out of the ground in Australia should be subject to the country’s tax and royalty systems, no matter where they are sold from.
BHP could not immediately provide comment on the latest ruling.
The Australian Tax Office did not have an immediate comment.
In 2018, BHP settled a separate transfer pricing dispute with the tax office for about $529 million, ending a battle over whether the company had been avoiding tax by basing its marketing arm in Singapore.
It also agreed last June to pay the WA Government $250 million to end a dispute over royalties paid on iron ore shipments, also sold through its Singapore marketing hub.