The Mongolian Tax Authority has accused Turquoise Hill Resources, a 51% Rio Tinto-owned mining firm, of unpaid taxes, penalties and disallowed entitlements associated with the $6.6bn Oyu Tolgoi copper and gold mine project.
Turquoise Hill, which owns 66% of Oyu Tolgoi mine, said in a statement that Oyu Tolgoi has paid all taxes and charges as per the agreement and Mongolian law.
Oyu Tolgoi mine's operating unit director Ganbold Davaadorj said that the disputed amount is around $130m, reported Bloomberg.
The audit covers fiscal 2010, 2011 and 2012, Davaadorj added.
Turquoise Hill CEO Kay Priestly said, "We strongly disagree with the claims in the audit report and are currently reviewing all options to resolve this matter."
"It is important that we protect our right of tax stabilization provided by the Investment Agreement," Priestly said.
Rio Tinto and Turquoise Hill are reviewing the tax claim and would consider an international arbitration if the claim is found to be a breach of the investment agreement.
If a resolution to the tax related issues is not concluded prior to 30 June, the underground feasibility study is likely to be delayed, which could impact negotiations between Mongolia and Rio Tinto to finalize a $4bn financing package, Turquoise Hill said.
Commitments from the international lenders are scheduled to expire on 30 September.