Rio Tinto rejects allegation it dodged $700 million in Oyu Tolgoi taxes

Rio Tinto (ASX, LON, NYSE: RIO), the world’s second largest mining company, denied Wednesday a report released by a Dutch non-profit organization claiming it had dodged $700 million in taxes to Mongolian and Canadian authorities relating to its Oyu Tolgoi copper and gold mine.

According to the Dutch Centre for Research on Multinational Corporations (SOMO), Rio and its Canadian subsidiary Turquoise Hill (TSX, NYSE:TQR), avoided nearly $470 million in Canadian taxes by using mailbox companies in two tax havens, Luxembourg and the Netherlands.

The publication also claims that, through an investment agreement covering the Oyu Tolgoi, Rio has caused Mongolia a $230 million tax revenue loss.

“It’s shameless tax avoidance,” said Vincent Kiezebrink, one of the report’s authors. “It doesn’t just affect the world poorest, but also regular people in Western countries as well.”

Rio Tinto, which is in the midst of executing a $5.3 billion underground expansion of the giant copper-gold operation, denied SOMO’s claims.

“The flawed SOMO report contains a number of unsubstantiated and incorrect allegations regarding tax,” Rio Tinto said in an email statement.

According to the company, Oyu Tolgoi’s structure was agreed beforehand between the company and the Canadian and Mongolian governments. It added the tax outcomes were in line with those in Australia, the US and Chile.

More to come…

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