Shell’s multibillion-dollar tax bill provides relief in the UK
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INTERNATIONAL - Royal Dutch Shell paid billions of dollars in tax in 2019 to governments around the world. But in four countries, the energy giant got money back.
The London-listed major paid $7.8 billion (R119.90 billion) in corporate income tax and a further $5.9 billion in royalties globally last year, it said in a report. The Sultanate of Oman made up the lion’s share, receiving $2.89 billion from Shell. But treasuries in the U.K., France, South Africa and Indonesia returned money.
The return of cash from the British government is largely down to Shell’s activities in the North Sea. The company didn’t pay corporation tax in 2019 because of tax losses tied to investments in new fields there. Additionally, it was given rebates linked to the dismantling of old platforms, meaning that it received $116 million from the U.K. government, similar to a year earlier.
The North Sea is an aging basin with hundreds of platforms still in production. As fields reach the end of their economic life they are decommissioned, meaning the government is hit with a double-whammy: giving out tax credits, while also receiving less money from taxable oil and gas sales. A 2019 report by the National Audit Office estimated that decommissioning will cost the U.K. treasury 24 billion pounds ($32 billion) due to tax relief.
Norway, where Shell has an effective tax rate of 78%, was the second-largest tax recipient with $1.09 billion last year, while Nigeria came in third at $851 million.
The report is the second time Shell has published its corporate income tax by country. It says it has a “tax presence” in 99 nations and locations, filing 43,000 tax returns annually.
The company has reviewed its presence in low- and zero-tax jurisdictions, ending some activities in Switzerland and Bermuda, Chief Financial Officer Jessica Uhl said in the report. The Anglo-Dutch major ended intragroup lending in Switzerland in 2019 and ceased lending activities in Bermuda this year.