Tax revenues generated from our activities form an important element of our contribution to the communities and countries in which we operate.
Approach to taxation
Mining is a cyclical, long-term business. New projects are typically highly capital-intensive with long lead times before returns are generated for shareholders. Mining investments are therefore sensitive to the prevailing tax regimes. Governments recognise that their countries exist in a globally competitive environment, competing for new and continuing long-term investment.
Making a difference in the developing world
The socio-economic impact of the Group is most significant in regions of the developing world where our absence would mean fewer sources of employment, income and, therefore, tax revenues. Our influence in many local economies reaches significantly beyond our operations and employees, with direct and indirect benefits extending, for example, to businesses supporting the Group’s operations.
Tax impacts of government incentives
Governments recognise the significant benefits that an economy can accrue through the responsible extraction of natural resources. Many provide incentives to attract investment, such as grants, special allowances, tax credits or tax or royalty holidays. They recognise that the incentives, which are also offered to other industries, indirectly enhance diversification of the local economy, increase the contribution of the manufacturing sector towards job creation and increase the country’s gross domestic product. The tax impact of these benefits is reflected in the tax numbers shown on our Data and analysis page.
Many other indirect tax benefits arise as a result of the Group’s operations, since our customers and suppliers also pay company, employee and other taxes.
Anglo American has a tax strategy that has been reviewed, endorsed by the Board, and is aligned with our long-term business strategy and Good Citizenship Business Principles. This strategy, actively managed through a global team of tax professionals, is central to our tax governance, the management of reputational risk, and to ensuring that appropriate taxes are paid in each jurisdiction.
Partnerships and collaboration
As well as our association with the Extractive Industries Transparency Initiative (EITI), we endeavour to maintain constructive partnerships with tax authorities as this can result in the more timely resolution of any disputes and, in some cases, prevent disputes arising in the first place. In contrast, there are instances when we must challenge tax authorities in the best interests of the Group. One example is the litigation under EU law relating to the taxation of foreign-controlled subsidiaries.
We engage with a variety of stakeholders on a range of issues relating to tax, and we’re also part of global industry bodies that help to bring commercial understanding and experience into debates about tax policy and governance.
There are many factors that affect a company’s investment decisions but an important one is the regulatory and fiscal framework of a country and their impact on competitiveness and suitability as a long-term mining destination.
We are a founder member of the Extractive Industries Transparency Index, and support the principles of transparency. We voluntarily publish information on the taxes we pay. In 2012, global taxes borne by Anglo American totalled $4,831 million. We think this figure helps to demonstrate the important economic contribution that we make to the communities and countries in which we operate.