Alcoa Wins Tax Dispute in Australia

By Bobby Samwell • Wednesday, April 30 10:11 • Permanent Link

Alcoa of Australia Limited, a subsidiary of Alcoa Corporation, has announced that it welcomes a decision by the Administrative Review Tribunal of Australia (ART) in relation to a review of disputed tax liabilities. The dispute involves transfer pricing of historic third-party alumina sales, and the ART ruled that no additional tax is owed, aligning with Alcoa's position. Previously, Alcoa paid approximately $74 million (A$107 million) in response to the Australian Taxation Office's (ATO) assessment, and as of March 31, 2025, the prepaid tax asset related to this payment was $67 million (A$107 million).

Following the decision, Alcoa began deducting the interest on both the disputed tax amount and the ATO's initial interest assessment from its taxable income starting in the third quarter of 2020. If the ATO does not appeal the ART's decision, the disputed tax claims, along with related interest and penalties, will be withdrawn. Consequently, the $67 million (A$107 million) is expected to be refunded to Alcoa in June 2025. Additionally, cash taxes of approximately $216 million (A$343 million) related to the interest deductions will be payable by Alcoa by June 1, 2026, resulting in a net cash impact of approximately $149 million (A$236 million) over the next fourteen months at current exchange rates.

Alcoa Corporation (NYSE: AA, ASX: AAI) is a global industry leader in bauxite, alumina, and aluminum products, aiming to revolutionize the aluminum industry for a sustainable future. The company plans to make future announcements regarding its developments and financial performance through various channels, including its website, press releases, SEC filings, conference calls, media broadcasts, and webcasts.

This announcement marks a significant development for Alcoa as it navigates the resolution of disputed tax liabilities in Australia, potentially leading to a substantial refund and cash tax impact over the next year. Today the company's shares have moved -4.0% to a price of $24.18. For the full picture, make sure to review Alcoa's 8-K report.

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