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Approach to transparency and tax

We are proud to be a corporate leader in transparency and have a long-standing record in that regard.

We first disclosed our aggregate payments of taxes and royalties in 2000 and since then, have continually increased our level of disclosure. This year, we have disclosed our profit, number of employees and effective tax rates on a country-by-country basis for the first time for our key jurisdictions. 

Our approach to tax is underpinned by Our Charter and our Code of Business Conduct and is embodied in our global tax principles.

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Our commitment to transparency

BHP has a long-standing commitment to transparency. We believe it enhances understanding, builds trust and holds us and others to account.

We’ve disclosed details of our tax and royalty payments for more than 18 years and during that time we have continually updated and expanded our disclosures. As in prior years, this Report discloses our total direct economic contribution, including the taxes and royalties we paid on a country-by-country and project-by-project basis. We also disclose additional voluntary information, such as details of each of our subsidiary entities in ‘tax haven’ countries and tax incentives we have been granted by some of our host governments. In addition, we disclose our intra-group transactions and relationships with tax authorities in compliance with the Australian Voluntary Tax Transparency Code.

Consistent with our commitment to transparency, we have again increased our level of disclosure. This year, we disclose for the first time our profit, number of employees and effective tax rates in the key countries in which we operate.

Read more from our CFO.

CFO Peter Beaven

Also see

Annual Report 2018

Discover more

Sustainability Report 2018

Discover more

Water Report 2018

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BHP Economic Contribution Report 2018

Economic Contribution Report 2018

 
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FY2018 Total economic contribution

We are proud of the value we generate and how this contributes to building trust with the communities in which we operate.

The economic contribution we make is an important part of this. Our total direct economic contribution for FY2018 was US$33.9 billion. This includes payments to suppliers, wages and benefits for our more than 62,000 employees and contractors, dividends, taxes and royalties, and US$77.1 million voluntarily invested in social projects.

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FY2018 Total economic contribution

US$33.9 billion total contribution through payments to suppliers, wages and employee benefits, dividends, taxes and royalties.

US$33.9 billion total contribution through payments to suppliers, wages and employee benefits, dividends, taxes and royalties.

US$7.8 billion globally in taxes, royalties and other payments to governments.

US$7.8 billion globally in taxes, royalties and other payments to governments.

31.4% global adjusted effective tax rate, 39.9% once royalties are included.

32.0% Australian adjusted effective tax rate, 43.7% once royalties are included.

US$6.0 billion in Australian taxes, royalties and other payments to governments.

BHP’s contribution to the global economy is significant.

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Also see

Annual Report 2018

Discover more

Sustainability Report 2018

Discover more

Water Report 2018

Discover more
BHP Economic Contribution Report 2018

Economic Contribution Report 2018

 
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Our contribution throughout the value chain

The scale and long-term nature of our operations enable us to generate considerable value – both financial and social – in the countries where we operate.

We create value for our shareholders and the broader community at each step in our value chain, supporting improvements in the standard of living in the communities in which we operate.

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How we contribute

Evaluation and exploration

Jimblebar mine site

  • Payments to suppliers and contractors
  • Wages paid to employees
  • Permits, licence fees and employment taxes
  • No royalties or corporate tax

Evaluation and exploration work is largely about creating the potential for future value. Payments to governments during the exploration phase are usually relatively low, reflecting the high levels of investment and risk of this work. Permits, licence fees and employment taxes make up the majority of payments to governments. Contributions to the community include payments to suppliers and contractors for any construction or excavation and wages to employees (often for highly skilled and specialist roles, such as geologists, metallurgists and environmental scientists).


Development

A truck driving up the ramp at the Spence copper mine in Chile

  • Capital expenditure
  • Payments to suppliers and contractors
  • Wages paid to employees
  • Employment and sales taxes, import duties
  • No royalties or corporate tax
  • Host community contributions

Development involves construction of facilities, excavation and any supporting infrastructure that is required. This can extend to construction of whole towns, including schools, medical facilities and recreation areas. More jobs are created, both directly in construction and more broadly through the provision of goods and services to the site and workforce. Host community contributions begin to be made. Payments to governments are largely in the form of indirect taxes (such as goods and services taxes or excise fees) on equipment and materials, and employment taxes.

Extraction and processing

Man at the Olympic Dam mine site

  • Net profits – corporate taxes paid
  • Royalties paid from extraction
  • Payments to suppliers and contractors
  • Wages paid to employees
  • Employment and sales taxes, import duties
  • Host community contributions

Once extraction begins, royalties and resource taxes begin to be paid. Employment taxes increase as the operating workforce commences. Corporate income tax may also begin to be paid; however, this is often lower in the early years of an operation as tax losses from the construction phase are offset against income. Over the life of the operation, payments to governments will be significant and can often equal as much as 50 per cent of profit. Host community contributions continue through the operating life. Payments to shareholders, lenders and investors also increase as income from operations is generated. As we invest in long-term assets, we also create high-value, long-term job opportunities and build strong relationships with communities, suppliers and contractors.

Rehabilitation and closure

Two people in nature in Newman, Western Australia

  • Payments to suppliers and contractors
  • Corporate taxes paid if alternative revenue streams from post-mining land use are found
  • Lower employment and sales taxes
  • Low or no royalties

Land no longer required for operations is rehabilitated, taking into account regulatory requirements and community expectations. Rehabilitation activities are often interwoven with the continuing development of nearby operations. Payments to governments will be lower, as will employment and payments to suppliers and contractors, but post-mining land uses may generate new revenue streams for BHP and the local community.

Marketing and Supply

Ship loading at Escondida

  • Payments to suppliers and contractors
  • Wages paid to employees
  • Corporate, employment and sales taxes, import duties

We sell and transport our products and obtain the goods and services that flow into our supply chain. Contributions include payments to suppliers, with a significant amount of spending directed to businesses in the communities in which we work. We also employ more than 1,700 people in our Marketing and Supply business globally. The contribution of our other businesses is enhanced by the activities of Marketing and Supply: Marketing maximises the prices received for the sale of our products and Supply ensures our unit costs are competitive, maintaining the sustainability of our operations.

Also see

Annual Report 2018

Discover more

Sustainability Report 2018

Discover more

Water Report 2018

Discover more
BHP Economic Contribution Report 2018

Economic Contribution Report 2018

 
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