JOHANNESBURG (Reuters) – Rio Tinto on Wednesday denied allegations by a Dutch non-profit organization that it had avoided paying $700 million of tax to Mongolian and Canadian authorities relating to its giant Oyu Tolgoi copper project.
Rio Tinto is investing about a $1 billion a year at Oyu Tolgoi in the Gobi Desert, where it operates a mine and is building an underground extension that would add approximately 500,000 tonnes of production a year in the next decade.
The Centre for Research on Multinational Corporations, known as SOMO, alleged in a report that Rio and its Canadian subsidiary Turquoise Hill used so-called mailbox companies in the Netherlands and Luxembourg to avoid $470 million in Canadian taxes and $230 million in Mongolian taxes.
Rio denied the allegations in a statement. Its shares were trading 0.5 percent lower at 1500 GMT. “The flawed SOMO report contains a number of unsubstantiated and incorrect allegations regarding tax,” Rio Tinto said.
It added Oyu Tolgoi’s (OT) structure was agreed in advance with the governments of Canada and Mongolia and the tax outcomes were in line with those in Australia, Chile and the United States.