Alumina Ltd in Australia stated that its joint venture with aluminium giant Alcoa has been evaluated $212 million in previous taxes over alumina sales to the aluminium smelter in Bahrain, known as ALBA.
The Australian Taxation Office (ATO) has also highlighted that the compound interest on the tax owed by Alcoa of Australia (AoA) amounts to $707 million. However, it has invited the company to make submissions on why that charge should not be fully payable.
The ATO is also expected to compute administrative penalties by August’20, though Alcoa of Australia is unable to guess the figures.
Mike Ferraro, CEO, Alumina Ltd. said: “The ATO had carried out an investigation focused on AoA's sales over a 20-year period.”
The ATO proclaimed that AoA under-priced its alumina sales over a 20-year period to Aluminium Bahrain BSC., one of the largest aluminium smelters in the world.
Alumina’s only business is a 40% stake in the Alcoa Worldwide Alumina and Chemicals (AWAC) joint venture, of which Alcoa of Australia (AoA), which mines bauxite and refines alumina in Western Australia, is a part.
Alumina’s position is that the sales were the result of arm’s length dealing at prices consistent with those paid by other third-party alumina customers.
Alumina said: “Alumina notes that the ATO is seeking to assess tax on sales revenue which it contends that AoA should have received, rather than the amounts actually received by AoA.”
“Neither AoA nor any related entity received any benefit other than the sales revenue received over the relevant period from an unrelated party.”
The ATO cleared out the fact that it couldn’t comment on the affairs of individual taxpayers, but said its Tax Avoidance Taskforce had a “robust compliance program, with specialist tax teams engaging directly with taxpayers to ensure they meet their obligations.”
Alcoa and Alumina have rejected the ATO's claims. AoA intends to challenge the tax bill but will have to pay half of the primary tax amount about $107 million as part of the ATO’s dispute resolution practices.
Alumina said that AoA has paid about $3.1 billion in income taxes over the past decade in Australia, with an effective tax rate of about 30%
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