The Rio Tinto Limited (ASX: RIO) share price is in the red on Thursday, tumbling 2.77% to trade at $95.09.
Its downturn comes amid news the Australian mining giant has agreed to fork out nearly $1 billion in unpaid taxes. It marks one of the largest tax settlements in Australian history.
The stock is currently defying a broadly flat market today. The S&P/ASX 200 Index (ASX: XJO) is down 0.15% right now. At the same time, the All Ordinaries Index (ASX: XAO) has slipped 0.03%.
Let's take a closer look at the agreement reached between Rio Tinto and the Australian Taxation Office (ATO).
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Rio Tinto agrees to near-$1b ATO settlement
The Rio Tinto share price is suffering on Thursday. Meanwhile, news the company has been ordered to fork out hundreds of millions of additional tax has hit headlines.
The ATO and the company have reached a settlement that will see Rio Tinto handing over $613 million in tax for the 12 years between 2010 and 2021. That's on top of $378 million already paid by the resource giant.
The settlement was born from two disputes. One regarded the pricing of sales of Australian materials, including iron ore and aluminium, to Rio Tinto's commercial centre in Singapore. The other related to interest on a borrowing used to pay an intragroup dividend in 2015.
It puts an end to a near-decade long investigation by the ATO.
"[The settlement] means that additional profits from the sale of Rio's Australian owned commodities will be taxed in Australia in the years to come," ATO deputy commissioner Rebecca Saint said, continuing:
The complexity of properly understanding the global affairs of multinationals … can take years of rigorous investigation. This is the case even when the multinational is fully engaged, shares information, and is motivated to resolve the issue, such as with this settlement.
The company has also entered an agreement with the Inland Revenue Authority of Singapore. Together, the agreements lock in transfer pricing arrangements on materials between Australia and Singapore until 2026 and ensure the company doesn't face double taxation.
Rio Tinto chief financial officer Petter Cunningham commented on the agreements, saying:
We are glad to have resolved these longstanding disputes and to have gained certainty over future tax outcomes relating to our Singapore marketing arrangements.
Rio Tinto share price snapshot
Today's dip included, the Rio Tinto share price is around 4% lower than it was at the start of 2022. It has also slipped 24% since this time last year.
For comparison, the ASX 200 has fallen 11% year to date and 7.5% over the last 12 months.
