Finance Finance News Exxon Mobil tops list of Australia’s top 10 tax dodgers

Exxon Mobil tops list of Australia’s top 10 tax dodgers

Exxon Mobil is the biggest tax dodger in Australia.
Exxon Mobil have topped the list of Australia's biggest tax dodgers.
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The New Daily and Michael West count down the 10 biggest corporate tax dodgers in Australia. See the table below for the complete list.

Whether it is misleading the Parliament of Australia, cutting its workers’ wages, paying zero tax while racking up $33 billion in income, sending gas prices into the stratosphere or dudding the poor people of Papua New Guinea, Exxon has flair.

It is also a master of intrigue. You won’t find the financial reports for ExxonMobil Australia on its website, you won’t even find the name of its directors, despite the size of this operation. You certainly won’t find their photographs without Googling madly and paying for company searches.

You absolutely won’t find mention of 585 entities Exxon has in the Bahamas, or for that matter, any breakdown of related tax-haven associations.

How is it that this, the biggest of the US oil majors, a corporation that has been making fabulous profits in Australia for 50 years, can pay zero income tax? How does it skin its taxable income in this country back to zero?

In fact, ExxonMobil (under the trading name ‘Esso’) drilled Australia’s first offshore well through a joint venture with BHP Billiton, when it discovered the Barracouta gas field in the Bass Strait in 1965.

Two years later Kingfish was found, the first offshore oil field, which to this day remains the largest oil field discovered in Australia.

How is it that with record, eye-watering gas prices, Exxon pays no income tax?

Its financial statements provide a few clues: Massive “debt-loading” – its Australian companies borrow billions of dollars from other Exxon companies overseas and funnel hundreds of millions of dollars out via interest payments on the loans.

And finally it has been pinged for it. Its 2018 financial report discloses the Australian Tax Office has been investigating Exxon’s related-party loans and has busted it for being slippery, issuing amended income tax assessments for 2010 and 2011.

Exxon brazenly notes it might sue the tax office, or settle, as it continues to “negotiate” over what it claims is fair pricing. These fighting words are typical of a bullying multinational oil giant.

Yet. it also notes the fight with the ATO has implications for 2012 to 2017 and Exxon is acutely aware of what befell its peer, Chevron, which muscled up to the ATO and lost an historic case, for pretty much the same practice – aggressive “transfer pricing of money”.

Post the four-year ATO tax transparency figures, Exxon’s latest financial statements show more of the same – thanks to spiking gas prices, cashflow jumped from $8.2 billion to $11.3 billion. Profits were wiped out by massive related-party debt.

Tax rose from $341 million to $508 million. But guess what? Not in Australia. This tax booked in the Australian entity, although the accounts don’t specify it, and although Exxon executives refused to be interviewed about it, represents tax paid in other countries, namely Papua New Guinea and Indonesia.

Further, they have lobbed in petroleum resource rent tax (PRRT) as income tax, when it has the quality of a royalty for extracting non-renewable resources from the seabed.

And then there’s the monster debt, the monster weapon of tax avoidance: Some $1.8 billion in finance charges over the past two years on Exxon’s eye-watering debt of $17.6 billion – debt owed to itself, offshore, debt to suck the profits out of Australia along with the gas.

Exxon-Mobil provided the following response, on Thursday:

“We have made significant contribution to Australia’s economic wellbeing through the reliable supply of energy that helps fuel growth and $40 billion in the country. We have paid more than $2 billion in corporate income tax alone since 2000, as well as more than $13 billion in Petroleum Rent Resource tax since 1990.

“On average more than $600 million has been paid to the federal government each year for over a quarter of a century. With a total investment of more than $21 billion since 2010, of which 85 per cent has been invested over the past six years, we are a substantial investor in the Australian economy and a major contributor to the wealth of the nation.”

This is the final part of a 10-part series on the nation’s biggest tax dodgers. Click here to read part nine.

For the full details of Michael West’s investigation into Australia’s 40 biggest tax dodgers you can visit his website, here.

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