Ampol has agreed to pay $157 million to settle a long-running dispute over its use of a Singaporean marketing hub. 

The agreement covers the transfer pricing outcomes of crude oil and refined products between Ampol Australia and Ampol Singapore, as well as the application of the Australian controlled foreign companies regime to Ampol Singapore’s profits.

The agreement also ensures that the company will pay Australian tax on earnings until 2033.

“We are pleased to have reached an agreement with the ATO and to have certainty over the future tax treatment of Ampol Singapore earnings. The changes minimise operational disruption, while ensuring we fairly meet our tax obligations in Australia,” said Greg Barnes, the company’s chief financial officer.

Ampol will pay an additional $5.6 million in Australian tax on earnings made between 2014 and 2021, plus $100,000 in interest. 

The company has already paid $104.1 million in Australian tax on Ampol Singapore earnings and will pay a further $48.2 million for the year ending on 30 June.

Ampol will not face any fines, nor will any anti-avoidance provisions be applied by the ATO.

Rebecca Saint, deputy commissioner of the ATO, said the agreement illustrated the body’s work with multinational companies to enforce tax rules.

“Locking in tax outcomes for the future has become an important feature of our settlements with multinationals, as it provides us, taxpayers and the community with certainty that the multinational is meeting their tax obligations into the future, avoiding future disputes,” she said.

The use of such commercial hubs has been controversial due to questions over why pricing of commodities would be marked up between Australia and Singapore within the same company.

The ATO has focused on overseas procurement and marketing hubs, scrutinising activity in low-tax jurisdictions. 

Since 2016, tax liabilities of over $30.6 billion have been raised by the ATO, with the enforcement work of its tax avoidance taskforce generating $12.8 billion of total revenue.

Ampol joins BHP and Rio Tinto in agreeing to pay a major tax settlement for misuse of a Singaporean marketing hub.