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Our approach to transparency and tax

We are proud to be a corporate leader in transparency and have continually updated and expanded our level of disclosure over the 20 years we have been disclosing details of our tax and royalty payments.

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

“In FY2020, our tax, royalty and other payments to government totalled US$9.1 billion. During the last decade, we paid US$85.0 billion globally in taxes, royalties and other payments."

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

BHP’s corporate purpose is to bring people and resources together to build a better world. 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 FY2020 was US$37.2 billion. This includes payments to suppliers, wages and benefits for our more than 80,000 employees and contractors, dividends, taxes and royalties, and voluntary investment in social projects across the communities where we operate.

In FY2020, our tax, royalty and other payments to governments totalled US$9.1 billion. Of this, 82.2 per cent or US$7.5 billion was paid in Australia. During the last decade, we paid US$85.0 billion globally in taxes, royalties and other payments, including US$64.2 billion (approximately A$76.0 billion) in Australia.

Read more from our CFO

Peter Beaven

Also see

Annual Report 2020

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Sustainability Reporting 2020

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Climate Change Report 2020

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Economic Contribution Report 2020

 
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FY2020 Total economic contribution

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

In FY2020, our total direct economic contribution was US$37.2 billion, including payments to suppliers, wages and employee benefits, dividends and other payments to shareholders, taxes and royalties, as well as voluntary social investment across the communities where we operate.

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FY2020 Total economic contribution

US$37.2 billion total economic contribution. Through payments to suppliers, wages, employee benefits, dividends, interest payments, social investment, taxes, royalties and other payments to governments with US$22.4 billion being our total economic contribution in Australia

US$9.1 billion global taxes, royalties and other payments to governments. US$7.5 billion, or 82.2 per cent, of this was paid in Australia.

33.2% global adjusted effective tax rate. 42.2% once royalties are included. This is broadly in line with our average adjusted effective tax rate over the past decade of 33.5%.

31.7% Australian adjusted effective tax rate. 42.4% once royalties are included. BHP remains one of the largest taxpayers in Australia.

US$7.5 billion in Australian taxes, royalties and other payments to governments. In the last 10 years we have paid US$64.2 billion (~A$76.0 billion) in Australian taxes, royalties and other payments to governments.

Also see

Annual Report 2020

Discover more

Sustainability Reporting 2020

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Economic Contribution Report 2020

 
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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
  • 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
  • Contributions to communities in which we operate

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. Contributions to local communities 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
  • Contributions to communities in which we operate

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. 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. 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 

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

Sales and Marketing and Procurement are separate core businesses of BHP, connected under the Commercial function. They are the link between BHP’s global operations, our customers and our local and global suppliers, and are aligned to our assets. 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 also employ more than 2,300 people in our Commercial function globally. The contribution of our other businesses is enhanced by the activities of our Commercial function. Sales and Marketing maximise 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 2020

Discover more

Sustainability Reporting 2020

Discover more

Economic Contribution Report 2020

 
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