Australia wins appeal against BHP over tax owed by marketing arm

MELBOURNE, Jan 29 (Reuters) - Australia’s federal court ruled against BHP Group Ltd on Tuesday over whether the global miner should pay tax in Australia on profits made by its marketing arm on the sale of commodities owned by the company’s UK side, BHP Group Plc.

BHP, which has a dual sharemarket listing in Australia and the UK, was considering whether to appeal the decision to the High Court of Australia, a spokesman said.

The tax office says BHP owes A$82 million ($59 million) in “top-up” tax for 2006 to 2015 on sales of commodities, now mostly energy coal, from BHP Group Plc’s Australian subsidiaries, made through the group’s marketing arm, BMAG, according to BHP’s 2018 annual report.

As a result of the judgment by the full bench of the Federal Court, 58 percent of BMAG’s profits from the sale of commodities from BHP Group Plc would be subject to Australian for the years since 2006.

The judgment overturned an earlier ruling by a tax tribunal that had backed some of BHP’s objections to the tax assessment.

The Australian Taxation Office declined to comment on its win on Tuesday, given the case could still be subject to further court action.

The fight is separate from a transfer pricing dispute with the tax office which BHP settled last November for about A$529 million, ending a battle over whether the company had been avoiding tax by basing its marketing arm in Singapore.

As part of that settlement, from 2020 onward, 100 percent of BMAG’s profits from the sale of Australian commodities from the BHP Group Plc side will be subject to Australian tax. ($1 = 1.3947 Australian dollars) (Reporting by Sonali Paul; editing by Richard Pullin)