Bhp Billiton Ltd: Petroleum Company

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Bhp Billiton Ltd: Petroleum Company

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Bhp Billiton Ltd: Petroleum Company

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Question:
Discuss about theBhp Billiton Ltd for Petroleum Company.

Answer:

BHP Billiton, an Anglo Australian multinational mining, metals and Petroleum Company with its head office in Melbourne, Australia. As per the market value of 2015, BHP is considered to be the largest mining company globally and in terms of revenue the fourth largest company in Australia. Formed in the year 2001, the Company was born out of a merger between BHP, an Australian company and an Anglo Dutch company named Billiton Plc. The company is listed in two stock exchanges i.e in the Australian stock exchange and in the London Stock Exchange as well. The company’s global headquarters as well as Australian registered corporate office both are situated in Melbourne. However the said headquarter is in relation to the entire group and the company registered in Australia. However it has another office located in London of BHP Billiton Plc.
The company basically is a part of the mining industry and also operates into oil and gas production as well. BHP has basically four main divisions of its operations which are Iron Ore, Coal, Petroleum and Potash and Copper. It provides employment to 26827 people in Australia which comprises of employees from its various subsidiaries as well and employs 41000 people across the 25 countries in which it operates (Statista.com., 2016).
The regulatory framework with regards tax is not very convincing for the corporations. Since BHP Billiton is a resident company of Australia, he is forced to pay tax on the entire income that it earns worldwide and capital gains as well after taking into consideration the various exemptions. The biggest problem from the present tax regime in Australia is that the greater the value the company creates in the global market, the higher amount of taxes and royalties it has to pay in Australia where it is operating mainly. Unfortunately, BHP is paying a tax of about 58 percent of the total profit it had earned by marketing in Singapore which were related to Australian commodities. Therefore in the past decade the company ended up paying for A$1 billion which was very disheartening for the company (IBISworld., 2016). Thus the tax system in Australia is very complicated wherein BHP Billiton- a multinational company operating and incorporated in Australia is bound to pay a tax of 30 percent. The country has a very broad based company tax regime which rules to tax the assessable income basis the territory where the income is being earned. Thus if the assessable income is earned within Australia then the profit is subject to taxes as per the Australian company tax rule and where the income is earned outside Australia, then the same is generally exempt from being taxed only if the profits were “actively” earned. But unfortunately in some circumstances the companies are required to pay “top-up” taxes to the government of Australia on send back earnings as per the ruling laid down by Controlled Foreign Company rules due to which BHP had to pay such top-up tax on the incomes it repatriated from the Singaporean marketing hub (Bhpbilliton.com., 2016). Thus the Australian tax rules and regulations has impacted BHP in a major way wherein it has ended up paying much more than just 30 percent of the total earnings as tax (Lawandtax-news.com., 2017).

A major assessment of the same is undertaken by BHP Billiton Iron Ore so as to understand the implications on Matters of National Environmental Significance since it is mainly into performing operations into the iron ore and oil and gas segments which pose major threats to the safety of the environment. They are reviewing the said arrangements which are connected with the expansion of the new iron ore mines, the road and rail network attached to such a development, the expansion of the mines which are already running and activities in relation to closing down of the existing operative mines. Therefore in the year 2012, BHP Billiton Iron Ore Pty Ltd. signed an conformity with the Australian Government to ensure undertaking of a strategic evaluation of the implication of the development of iron ore mines in future and the various infrastructure attached to it in the Pilbara region of Western Australia with regards the National Environmental Significance. The said agreement was formulated in accordance with Section 146(1) of the Environment Protection and Biodiversity conservation Act 1999 which help to evaluate the implications of executing the actions as per the policy. BHP Billiton Iron Ore continues to develop more iron ore mines and the attached infrastructure to these mines and also to uphold the present Pilbara business in upcoming time period as well.
The impact of the said agreement is that it would give capacity to take into account the total implications in the Pilbara region and thus help gain the landscape scale environmental outcomes which would comprise of the submission of an efficient approach to manage the surrounding and important offsets as well. Therefore the said agreement signed by BHP will have an implication on the company to the extent that it will have to ensure that all its activities are undertaken after due consideration of the agreement and the fact that no provisions are ignored or not adhered to (Australian Government Department of the Environment and Energy, 2012).
Thus, BHP Billiton, one of the largest mining company of Australia is a multinational corporation operating in various countries smoothly. However the Australian regulatory framework with regards the taxation issues are so complicated that the company is often seen giving tax much more than the prescribed percentage and in some cases is even taxed twice. Lastly, in order to safeguard itself from the potential environmental hazards, the company is entering into various agreements and arrangements so as to be able to comply with them along with continuing its expansion policies with ease. The segment in which BHP operates is very sensitive towards the environment in which it dwells as mining causes a lot of environmental hazards which needs to be taken care of in a strategic manner.

References:
Australian Government Department of the Environment and Energy, (2012), Strategic Assessment of BHP Billiton iron ore expansion for the Pilbara, Available at https://www.environment.gov.au/protection/assessments/strategic/wa-pilbara-bhp (Accessed 26th April 2017)
Bhpbilliton.com., (2016), Taxation in Australia, Available at https://www.bhpbilliton.com/-/media/bhp/documents/society/operating-with-integrity/fact-sheet–taxation-in-australia.pdf?la=en (Accessed 26th April 2017)
IBISworld., (2016), BHP Billiton Limited- Premium Company Report Australia, Available at https://www.ibisworld.com.au/australian-company-research-reports/mining/bhp-billiton-limited-company.html (Accessed 26th April 2017)`
Lawandtax-news.com., (2017), Corporate Multinational Taxation, Available at https://www.lawandtax-news.com/html/australia/jozlatcorp.html (Accessed 26th April 2017)
Statista.com., (2016), Number of Employees at BHP Billiton from 2012 to 2016 by region, Available at https://www.statista.com/statistics/274234/number-of-employees-at-bhp-billiton-by-region/ (Accessed 26th April 2017)

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