BHP will pay the additional taxes for the income years 2003 to 2018 out of which it has already cleared A$328m ($238.23m) to settle the longstanding marketing hub dispute.

The mining major, which co-owns the $3.4bn South Flank iron ore project in Western Australia, said that the settlement totally resolves the dispute it had with the ATO between 2003 and 2018. Its agreement to make the settlement payment will mean that there will be no admission of tax avoidance by the company while giving certainty in relation to the future taxation treatment.

BHP chief financial officer Peter Beaven said: “The A$529 million payable under the settlement is in addition to the more than A$75 billion in Australian taxes and royalties that has already been paid by BHP over that same period.”

“The settlement provides clarity for BHP and the ATO in relation to how taxes will be assessed and paid on the sale of Australian commodities. That certainty is good for business and for Australia.”

The dispute revolves around the amount of Australian tax payable following the sale of BHP’s Australian commodities to its Singapore marketing business.

Apart from that, BHP Group starting from July 2019 will increase its stake in BHP Billiton Marketing, the main company that carries out the mining giant’s Singapore marketing business, from 58% to 100%.

The change in ownership percentage is expected to put all the profits recorded in Singapore in relation to the Australian assets owned by BHP Group completely under Australian taxation policies. It will also give certainty for BHP and also the ATO about the Australian taxation treatment of the miner’s Singapore marketing business in the coming years.

ATO Deputy Commissioner Jeremy Hirschhorn said: “This is a landmark and precedential development in the execution of our marketing hubs strategy, and sends a strong signal to other industry participants.

“Given the importance of mining and natural resources to the Australian economy, it is critical that exporters of Australian commodities, whether iron ore, coal, gas or other commodities, pay the correct tax in Australia on their profits.

“The ATO has had a significant focus on marketing hub arrangements to ensure profits generated in Australia, are taxed in Australia.”