Page 4 - BHP Economic Contribution Report 2020

Chief Financial Officer’s introduction

‘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. This significant contribution of taxation and royalty revenue
We believe it enhances understanding, builds trust and holds to the countries in which we operate gives governments the
us and others to account. We’ve disclosed details of our tax opportunity to provide essential services to their citizens and
and royalty payments for more than 20 years and during that invest in their communities for the future.
time we have continually updated and expanded our In addition, our investment in economies creates high-paying
disclosures. As in prior years, this Report discloses our total jobs, both directly within our assets and indirectly through
direct economic contribution, including the taxes and royalties our suppliers, which supports the standard of living and
we paid on a country-by-country and project-by-project basis. further development of those communities. We also create
We disclose reconciliation of this data to our Financial value for our shareholders, lenders and other investors through
Statements, including comparative data from prior years. the returns we provide, such as dividends. In FY2020, we paid
We also disclose additional voluntary information, such as US$8.6 billion to shareholders, lenders and investors.
details of each of our subsidiary entities in ‘tax haven’ countries
and tax incentives we have been granted in the countries in Tax competitiveness continues to be an important factor in our
which we operate. In addition, we disclose our intra-group investment decisions. Our investments create jobs and support
transactions and relationships with tax authorities in the standard of living and further development of the countries
compliance with the Australian Voluntary Tax Transparency that we invest in. As well as direct employment, in FY2020 we
Code. We also disclose further information regarding our paid US$15.5 billion to our suppliers globally, with US$1.9 billion
approach to tax risk management and governance. paid to local suppliers in the communities in which we operate.
Consistent with our commitment to transparency, we support We believe companies should pay their fair share of tax
the voluntary disclosure of country-by-country reports that and countries should have taxation rights commensurate
contain quantitative data, such as revenue from related with value created in those countries.
and unrelated parties, profit/(loss) before tax, and number We support the work currently being undertaken by the
of employees for each country in which a subsidiary entity of Organisation for Economic Co-operation and Development
a corporate group is a tax resident. We will publish our to reach a global solution to address the tax challenges of the
country-by-country data for FY2019, separately to this Report. digitalisation of the economy. We continue to be concerned
BHP’s corporate purpose is to bring people and resources about the risk of double taxation. For the extraction industry,
together to build a better world. We are proud of the valuable as the right to extract commodities is inherently and
contribution we make to the communities where we operate substantially connected with the country in which the
and to society as a whole. The economic contribution we make commodities are located, such countries should continue
is an important part of this. Our total direct economic to have the right to tax profits from the extraction of
contribution for FY2020 was US$37.2 billion. This includes commodities. For these reasons, we support an outcome that
payments to suppliers, wages and benefits for our more than results in the taxing rights in relation to profits associated with
80,000 employees and contractors, dividends, taxes and commodities continuing to remain with production countries.
royalties, and voluntary investment in social projects across We continue to contribute to the development of a solution
the communities where we operate. that provides for a globally competitive tax system that
In FY2020, our tax, royalty and other payments to governments supports economic growth and long term sustainable tax
contributions, and one that provides certainty and
totalled US$9.1 billion. Of this, 82.2 per cent or US$7.5 billion transparency on the taxing rights of profits associated
was paid in Australia. During the last decade, we paid US$85.0 with the extraction, sales and marketing of commodities.
billion globally in taxes, royalties and other payments, including
US$64.2 billion (approximately A$76.0 billion) in Australia. We look forward to continuing to make a positive contribution.
Our global adjusted effective tax rate in FY2020 was
33.2 per cent, which is broadly in line with our average
adjusted effective tax rate over the past decade of
33.5 per cent. Once royalties are included, our FY2020
rate increases to 42.2 per cent. Peter Beaven
Chief Financial Officer

2 BHP Economic Contribution Report 2020