This is the time of year that individuals begin to complain about filing their taxes. It’s a national pastime to wish your taxes were lower. Just be thankful your income tax obligations don’t add up to $10.2 billion (all amounts are US dollars), as is the case for Rio Tinto’s operations throughout the world.
The British company recently released its voluntary “Taxes paid report” that details the 2011 payments (that were 40% higher than 2010). The report also includes the details of all individual payments over $1 million made to governments in 34 countries where Rio Tinto operates.
CFO Guy Elliott said, “We have chosen to disclose these details voluntarily because we believe this level of transparency helps us to retain our licence to operate, promotes government accountability and plays a role in combating corruption.”
Rio Tinto reports spending 16% of its 2011 revenue on taxes collected by all levels of government. Just as most of its operations are in Australia, various Australian governments received $6.67 billion in tax revenue from the miner. Canadian governments received $801 million (the second largest amount) and the United States received $800 million. The list goes on through Guinea, Mongolia, Chile, South Africa, France, Indonesia and many more. Last on the list is New Zealand, where the company appears to have come out ahead by $71 million, due to tax deductions.
As for the type of tax Rio Tinto paid, by far the largest portion was paid for corporate income tax ($6.5 billion), and next were government royalties that amounted to $2.2 billion. Employer payroll taxes were $515 million, and “other” types were $1.0 billion.
Poking around the report a bit more reveals that Rio Tinto subsidiary Iron Ore Company of Canada took a total tax charge of $404 million. The Diavik diamond mine, 60% owned by Rio Tinto, was charged $40 million in taxes. Rio Tinto Fer et Titane, a titanium producer in Quebec, took a $72 million tax charge. That Rio Tinto Alcan paid the most tax, $756 million, is no surprise. (I’m not sure how these numbers add up to the Canadian total of $801 million.)
Rio Tinto’s voluntary disclosure of its tax payments is commendable. Such reporting may soon become part of every extractive industry’s social licence to operate.
The report may be read at RioTinto.com/ourapproach/taxespaidin2011.asp