Tuesday, March 20, 2018

ExxonMobil Expects to Resume Paying Australian Corporate Tax in 2021

March 14, 2018

(File photo: ExxonMobil Australia)

ExxonMobil Corp said on Wednesday it is likely to resume paying corporate tax in Australia only in 2021, after recouping billions of dollars in investments made in the country in the past decade.
The oil giant was grilled at an Australian Senate hearing on tax avoidance, after having paid no tax since 2013, despite reporting billions of dollars in income from operations in the country. The hearing is part of a broader inquiry in corporate tax avoidance in resource-rich Australia.
The country's tax authorities are battling major miners BHP Billiton (BHPLF) and Rio Tinto (RTNTF) as well as oil and gas giants over booking income in countries like the Netherlands and Singapore, where tax rates are lower.
"The only reason we're not paying tax at the moment is because we just invested A$21 billion ($16.5 billion)," ExxonMobil Australia Chairman Richard Owen told the Senate panel.
The company said it is in a tax loss position in Australia as it soaks up the cost of investing heavily in new gas production in the Bass Strait and the huge Gorgon gas project off Western Australia, both ramping up since 2017.
It expects to start paying A$600 million a year in corporate tax from 2021, the company's tax manager, Stuart Brown, said. Gorgon is unlikely to start paying petroleum resource rent tax until the mid-2030s, he said.
However, over the past decade ExxonMobil Australia had an effective tax rate of more than 50 cents in every dollar, including income tax and the petroleum resource rent tax.
ExxonMobil is undergoing an Australian tax audit regarding one inter-company, or related party, loan. But even if the Australian Taxation Office prevails in the dispute, it would have a "very, very small impact on our tax losses", Brown said.
The government won a landmark case against Chevron Corp last year over a contested tax bill of A$340 million ($267 million) stemming from a related party loan at an abnormally high interest rate that lowered the oil giant's taxable income in Australia.
ExxonMobil said the facts in its loan under audit were very different from Chevron's. Interest rates on the loan were set at around 3-5 percent, it said.
The Senate probe into corporate tax avoidance, which began in 2014, is due to issue a final report by the end of May.

($1 = 1.2703 Australian dollars)
(Reporting by Sonali Paul Editing by Kenneth Maxwell)

Related News