ExxonMobil to begin paying corporate taxes in Australia after dodging for a decade

Dec 15, 2022 News

Kaieteur News – American oil giant, ExxonMobil Corporation had avoided paying corporate taxes in Australia for a decade. In fact, the company had said that it will only resume paying its taxes in the year 2021, after recouping billions of dollars in investment it had made in the country.

While the company was expected to start paying its corporate taxes last year, it was only in May 2022, amid the high oil prices, when the company disclosed that it will resume paying its taxes for the first time in a decade.

According to the company’s website, ‘ExxonMobil Australia’ utilised carried-forward tax losses in 2021 and expects to resume paying income tax for 2022.”

In Australia there is a petroleum resource rent tax (PRRT) – a tax generally on profits generated from the sale of marketable petroleum commodities (MPCs).

The Guardian had reported that ExxonMobil touted that it was caught in a set of unique circumstances – caused by a large expenditure on capital investment and falling prices – which have left it without a taxable income. However, a report released by the Tax Justice Network in 2017 had exposed the links between the company’s Australian operations and tax havens in the Bahamas and the Netherlands.

As such the company’s Australian operations came under scrutiny. After having paid no tax since 2013, the oil giant Australian tax affairs have faced close scrutiny. It was in 2018, while being grilled at an Australian Senate hearing (Inquiry) on tax avoidance, when Exxon had disclosed that it did not expect to pay corporate tax until 2021.

According to Reuters despite reporting billions of dollars in income from operations in the country, ExxonMobil Australia Chairman, Richard Owen had told the Senate panel, “The only reason we’re not paying tax at the moment is because we just invested A$21 billion (US$16.5 billion). The company’s Tax Manager, Stuart Brown, had said that Exxon will start paying A$600 million a year in corporate tax from 2021.

Notably, the Guardian also reported that the oil major spent US$10 million over a 10-year period fighting Australian Taxation Office cases.

On the local front, Exxon’s affiliate Esso Exploration and Production Guyana Ltd (EEPGL), is the operator of the country’s richest oil block (Stabroek Block) and continues to enjoy tax-free earnings owing to the Production Sharing Agreement (PSA) Guyana signed onto with the oil major.

According to the 2016 PSA, Guyana has agreed to, under the taxation provisions, to pay ExxonMobil’s share of Corporation and Income Tax. As such it would mean, that Guyana foregoes each year, billions of US dollars. On top of this, documentation to this effect is then provided to the US based company allowing it to not have to pay any taxes in its home country for its earnings overseas.