February 20, 2019 / 6:40 PM / 10 months ago

Glencore will 'vigorously contest' $680 million tax demand

FILE PHOTO: The logo of commodities trader Glencore is pictured in front of the company's headquarters in Baar, Switzerland, July 18, 2017. REUTERS/Arnd Wiegmann

LONDON (Reuters) - Glencore on Wednesday said it would “vigorously contest” a $680 million (520 million pounds) tax demand from the British authorities linked to transfer pricing.

The Swiss-based mining and trading company has offices in London and is London-listed.

In its results statement on Wednesday, it said the British tax authorities “issued formal transfer pricing, permanent establishment and diverted profits tax assessments for the 2008 – 2017 tax years, amounting to $680 million”.

Transfer pricing happens when multinationals sell to their parent or subsidiaries abroad at lower prices, potentially avoiding taxes if they lead to the declaration of lower earnings or even losses.

In its results statement, Glencore said it was contesting the assessments following “various legal opinions received and detailed analysis conducted, supporting its positions and policies applied”.

The world’s biggest listed miner BHP late last year signed an agreement with the Australian Taxation Office (ATO) to settle a transfer pricing dispute regarding its marketing operations in Singapore.

Glencore on Wednesday reported record core profit of $15.77 billion for 2018, although its trading division’s earnings before interest and tax dropped by 17 percent to $2.4 billion.

Reporting by Barbara Lewis and Zandi Shabalala; Editing by Kirsten Donovan

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