As the base for global miner Rio Tinto's most profitable mines, Australia received the bulk of the group's tax and royalty payments over the past year, even as the miner remains locked in dispute with the local tax office over tax shifting abroad.

Across the group, Rio paid $US4 billion ($5.3 billion) in taxes and royalties in 2016, of which $US2.9 billion was paid in Australia, with Canberra and the West Australia government the largest beneficiaries.

The federal government received $US1.4 billion, with Western Australia pocketing $US1.1 billion in royalties and taxes, followed by Queensland, which received $US184 million.

Overall, the tax bill declined 12 per cent in 2016 from the year before, it said.

Group-wide, the effective tax rate of 22 per cent "is reflective of the statutory corporate income tax rates in the countries in which we operate", it said in a report the miner releases annually detailing tax, royalty and other payments globally.

"We pay the vast majority of our Group taxes in the countries in which we have mining and processing operations, with the effective tax rate on underlying earnings in Australia running at 30 per cent," it said in the report.

However, it warned maintaining corporate income tax at this level will make the country uncompetitive.

"We support the Australian government's policy to reduce the corporate tax rate," the group's chief financial officer, Chris Lynch, said. "If Australia remains with a 30 per cent corporate tax rate, this will come at a cost to investment and jobs, as other nations leave Australia behind."

Earlier this month, Rio was hit with a tax bill for an additional $379 million plus interest of $68 million, a total of $447 million as part of a long-running tax dispute with the Australian Tax Office over income routed through Singapore.

"Rio Tinto intends to challenge the full amount of the amended assessments," it said. "In the meantime, Rio Tinto is required to pay 50 per cent of the total amount assessed."

The miner continued to defend routing some revenue through Singapore, where it has 350 employees carrying out marketing, shipping, procurement and other services.

"Rio Tinto entities based in Singapore generate income from activities carried out by the centralised marketing, shipping and procurement functions," it said.

If Australia remains with a 30 per cent corporate tax rate, this will come at a cost to investment and jobs, as other nations leave Australia behind.

Chris Lynch

Marketing covers all group products from iron ore, bauxite and alumina, through to uranium and borates, with "all transactions carried out on an arms length basis", it said.

Some of Rio's activities in Singapore attract a tax rate of just 10 per cent – or less, it said.

Additionally it has 12 subsidiaries which are resident in "tax havens". of which four are dormant and either in liquidation or scheduled for liquidation, it said.