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Approach to transparency and tax

We are proud to be a corporate leader in transparency and have continually increased our level of disclosure over the 19 years we have been disclosing details of our tax and royalty payments.

This year we have added new disclosures relating to tax risk management and governance. We also support voluntary disclosure of country-by-country reports and will be publishing our country-by-country data for FY2019. 

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.

This Report continues to disclose 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 the tax incentives 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.

Read more from our CFO

Peter Beaven

Also see

Annual Report 2019

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Sustainability Report 2019

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Case Studies

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Economic Contribution Report 2019

Economic Contribution Report 2019

 
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FY2019 Total economic contribution

We are proud of the valuable contribution we make to the communities where we operate and to society as a whole.

The economic contribution we make is an important part of this. Our total direct economic contribution for FY2019 was US$46.2 billion. This includes payments to suppliers, wages and benefits for our more than 72,000 employees and contractors, dividends, taxes and royalties, and US$93.5 million voluntarily invested in social projects across the communities where we operate.

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FY2019 Total economic contribution

BHP

$US46.2 billion total contribution through payments to suppliers, wages and employee benefits, dividends, taxes and royalties.

BHP paid US$9.1 billion globally in taxes, royalties and other payments to governments

$US9.1 billion globally in taxes, royalties and other payments to governments.

36 per cent global adjusted effective tax rate, 44.7 per cent once royalties are included.

34.2 per cent Australian adjusted effective tax rate, 45.3 per cent once royalties are included.

$US7.1 billion in Australian taxes, royalties and other payments to governments.

Also see

Annual Report 2019

Discover more

Sustainability Report 2019

Discover more
Economic Contribution Report 2019

Economic Contribution Report 2019

 
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Our contribution throughout the value chain

BHP’s purpose is to bring people and resources together to build a better world.

We generate considerable value – both financial and social – to the communities in the countries where we operate and to society more broadly. We do this at each step in our value chain.

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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.

Commercial function

Ship loading at Escondida 

Sales and Marketing and Procurement are separate core businesses of BHP, connected under the Commercial function. They are aligned to our assets and are the link between BHP’s global operations, our customers and our local and global suppliers.

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 operate. We employ more than 2,000 people in our Commercial business globally. The contribution of our other businesses is enhanced by the activities of our Commercial function. Sales and Marketing maximises the prices received for the sale of our products and Procurement ensures our unit costs are competitive, maintaining the sustainability of our operations. 

 

Also see

Annual Report 2019

Discover more

Sustainability Report 2019

Discover more
Economic Contribution Report 2019

Economic Contribution Report 2019

 
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