ExxonMobile Corp announced recently that it will resume paying corporate taxes in Australia by 2021 only after recovering its investments that was made in the country for the past one decade. The company has been accused of tax avoidance since 2013 and was recently grilled at the Australian Senate where it emerged that the company is not paying its corporate tax despite posting great earnings from its operations in the nation. The Senate is yet to issue the final decision on the matter.
According to Richard Owen, Chairman of ExxonMobil, the reason the company is not paying its taxes is basically due to the huge amounts that it has invested in the country, which is more than $16.5 billion. The company also disclosed that it’s in a tax loss position since it has invested heavily in its gas production in both the Bass Strait and Gorgon gas project off Western Australia since last year. Therefore, the firm would only resume paying tax in 2021, after recovering its money.
The Australian tax authorities are facing challenges in dealing with large miners including the BHP Billiton and Rio Tinto and other oil and gas giants who demand that the tax rates should be reduced in comparison to other countries such as Netherlands and Singapore where the tax charges are lower.
For the last ten year, the company reported an effective tax rate of over 50 cents per dollar in both its income tax and petroleum resource rent tax. Currently, the firm is being audited by the Australian tax auditors over the related party loans repayment.
Last year, the Australian government won a case against Chevron Corporation over the alleged tax bills worth $267 million that accrued from the related party loan that was allegedly accelerated by an abnormal high interest rate that had a negative impact on the company’s tax income.
At the same time, ExxonMobil Corp is planning to double the capacity for the US light crude oil in the Gulf Coast to benefit from the country’s Shale oil production. The company’s proposed project if approved by the stakeholders would be the first largest expansion for the gasoline and motor fuels production in the country in six years.
Recently, President Donald Trump fired Rex Tillerson via the social media and immediately proposed CIA Director Mike Pompeo as his next Secretary of State. The decision made a stir in the development especially in the foreign policy that would likely have an impact on the performance of Exxon Mobil.