Underground in the Oyu Tolgoi mine. Photo @otmongolia Instagram
A new report from a Dutch non-profit group alleges Vancouver-based Turquoise Hill Resources Ltd. has avoided paying hundreds of millions of dollars in Canadian taxes on its Mongolian mine.
The Centre for Research on Multinational Corporations report alleges Turquoise Hill parent company Rio Tinto used so-called mailbox companies in the Netherlands and Luxembourg to channel financing of the massive Oyu Tolgoi mine.
The group says that by using the seemingly token subsidiary in the lower tax jurisdiction of Luxembourg, rather than through the Canadian subsidiary that actually controls ownership of the mine, Rio Tinto has avoided paying an estimated US$470 million in Canadian corporate income taxes.
The company did not immediately respond to a request for comment.
The report says the Mongolian government looked to terminate tax treaties that allowed Rio Tinto to access the lower tax rates, but that the company has been able to continue to access them because of clauses in an investment agreement it signed in 2009.
In light of the report, Canadians for Tax Fairness have called on the Canadian government to review its international treaties and introduce legal requirements to prevent abusive tax-avoidance practices.
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