On 20 July 2022 Australian mining group Rio Tinto issued a press release announcing that a A$ 1 billion settlement had been reached with the Australian Taxation Office. “The agreement resolves the disagreement relating to interest on an isolated borrowing used to pay an intragroup dividend in 2015. It also separately resolves the pricing of certain transactions between Rio Tinto entities based in Australia and the Group’s commercial centre in Singapore from 2010-2021 and provides certainty for a further five-year period. Rio Tinto has also reached agreement with the Inland Revenue Authority of Singapore (IRAS) in relation to transfer pricing for the same periods. Reaching agreement with both tax authorities ensures Rio Tinto is not subject to double taxation. As part of this agreement, Rio Tinto will pay to the ATO additional tax of A$613m for the twelve historical years (2010 to 2021). This is in addition to the A$378m of tax paid in respect of the original amended assessments issued by the ATO. Over this period, Rio Tinto paid nearly A$80bn in tax and royalties in Australia. Peter Cunningham, Rio Tinto Chief Financial Officer, said “We are glad to have resolved these longstanding disputes and to have gained certainty over future tax outcomes relating to our Singapore marketing arrangements. Rio Tinto remains committed to our commercial activities in Singapore and the valuable role played by our centralised commercial team.” Additional Information Rio Tinto was issued amended assessments in respect of iron ore marketing in 2017 (A$447m for the 2010 to 2013 years), for aluminium marketing in 2020 (A$86m for the 2010 to 2016 years) and for the intragroup dividend financing matter in 2021 (A$738m for the 2015 to 2018 years). The agreements separately reached with the ATO and IRAS cover the transfer pricing related to the marketing of all products between Australia and Singapore, including iron ore and aluminium, for all historical years from 2010 to 2021 and the future period to 2026. The ATO settlement payment includes A$55m of interest and A$22m of penalties. On 20 March 2020, Rio Tinto lodged requests for dispute resolution between the ATO and IRAS under the double tax treaty between Australia and Singapore (as disclosed in Rio Tinto’s 2020 half-year results). As a result of the agreements reached with both tax authorities, those requests have been withdrawn.” The settlement agreement has also been announced by the Australian Tax Office. ATO vs RIO TINTO70098 See also Australia vs Rio Tinto and BHP Billiton, April 2017 – Going to Court and Mining Group Rio Tinto in new A$ 86 million dispute with the ATO over pricing of aluminum ...

ResMed – a world-leading digital health company – in an October 2021 publication of results for the first quarter of FY 2022, informs that a $381.7 million tax settlement agreement has been entered with the Australian Tax Office. The dispute concerns the years 2009 through 2018, in which the ATO alleged that ResMed should have paid additional Australian taxes on income derived from the company’s Singapore operations. Excerpts from the announcement “Operating cash flow for the quarter was negative $65.7 million and was impacted by a payment to the Australian Tax Office of $284.8 million, which was the settlement amount of $381.7 million net of prior remittances.” “During the quarter, concluded the settlement agreement with the Australian Taxation Office (“ATO”), which fully resolves the transfer pricing dispute for all prior years since 2009. ResMed previously recognized a tax reserve in êscal year 2021 in anticipation of the settlement. The net impact of the settlement was $238.7 million ($381.7 million gross less credits and deductions of $143.0 million). The settlement provides closure for historic Australian tax matters and greater clarity into the future. As a result of the ATO settlement and due to movements in foreign currencies, recognized a $4.1 million reduction in tax credits during the quarter, which was recorded as an increase in income tax expense.“ Back in 2015 ResMed rigorously defended its tax position in a submission to the Australien Senate Economics Reference Committee following an inquiry into Corporate Tax Avoidance practices. ResMed-Inc.-Announces-Results-for-the-First-Quarter-of-Fiscal-Year-2022-2021 ...

In March 2020 the Australian Taxation Office issued an tax assessment regarding transfer pricing to Rio Tinto’s aluminium division according to which additional taxes in an amount of $86.1 million must be paid for fiscal years 2010 – 2016. According to the assessment Rio’s Australian subsidiaries did not charge an arm’s length price for the aluminium they sold to Rio’s Singapore marketing hub. This new aluminum case is separate to Rio’s long-running $447 million dispute with the ATO over the transfer pricing of Australian iron ore. Rio intents to object to the ATO’s aluminium claim and states that the pricing of iron ore and aluminium has been determined in accordance with the OECD guidelines and Australian and Singapore domestic tax laws ...

The Practical Compliance Guideline (Guideline) sets out the Australian Taxation Office’s (ATO’s) compliance approach to transfer pricing issues related to the location and relocation of certain business activities and operating risks into a centralised operating model. The type of activities commonly centralised include marketing, sales and distribution functions although centralised operating models are not necessarily limited to these functions. For the purposes of this Guideline, these centralised operating models are referred to as ‘hubs’. The ATO understands that the overall structure of hubs, the transactions that flow in and out and the diversity and sophistication of a hub’s dealings contribute to increased complexity and higher costs for tax compliance. The Guideline is designed to help manage the compliance risk and therefore the compliance costs associated with your hub. The framework set out in the Guideline can be used to: (a) assess the compliance risk of the transfer pricing outcomes of hubs in accordance with the ATO’s risk framework (b) understand the compliance approach that the ATO will likely adopt having regard to the risk profile of hubs (c) mitigate the transfer pricing risk in relation to hubs , and (d) understand the type of analysis and evidence the ATO would require when testing the outcomes of hubs. the ATO’s  engagement will be tailored having regard to the specific hub’s risk rating. If a hub is assessed as being in the low risk zone it can be expected that the ATO will not generally apply compliance resources to test and assess the transfer pricing outcomes. If a hub falls outside the low risk zone, It can be expected that the ATO will monitor, test and/or verify the transfer pricing outcomes. Hubs with a high risk rating will be reviewed as a matter of priority. There is no presumption that because a hub is outside the low risk zone that the transfer pricing outcomes are incorrect, rather it means that the ATO considers a risk and therefore the ATO may conduct further compliance activity to test the outcomes of the hub. The transfer pricing methods used in the risk framework in the Guideline are for risk assessment purposes only. Consistent with the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2010 (OECD guidelines), when pricing an arrangements the transfer pricing methodology (or combination of methodologies) that is most appropriate and reliable for your circumstances should be used. The Guideline is structured as follows: (a) Part A sets out the general indicators and principles of the hub risk framework. These principles are relevant to all types of offshore hubs and apply to both outbound and inbound goods and commodity flows (b) Part B provides guidance to assist you when preparing your transfer pricing analysis if you are outside the green zone, and (c) Schedules attached to this Guideline set out specific indicators relevant to particular types of hubs. ATO compliance approach to transfer pricing issues related to centralised operating models ...

The Applicant is an Australian subsidiary of the Roche Group, the parent company of which is a resident of Switzerland. Roche is a major pharmaceutical corporation with integrated operations in many countries. It carries on research and development, manufacturing, marketing, selling and distribution of pharmaceuticals, vitamins, chemicals, diagnostic and other products. During the 1993 to 2003 income years (the relevant income years) the Applicant carried on business in Australia marketing, selling and distributing Roche products through three divisions: the Prescription Division (dealing in prescribed drugs), the Consumer Health Division (dealing in over the counter pharmaceuticals) and Diagnostic Products (dealing in diagnostic equipment and supplies). Australia-vs-ROCHE-PRODUCTS-PTY-LTD-July-2008-Administrative-Appeals-Tribunal ...