Exxon confirms Tax Office in pursuit as it and Chevron rip $13bn dividends out of Australia

Woohoo! Two of the biggest tax cheats, ExxonMobil and Chevron (auditors for both are PwC) have finally begun to pay a mite of income tax in Australia but they also ripped out more than $13bn in dividends and returns of capital last year. Michael West reports their latest financials.

The financial statements for the year to December for ExxonMobil Australia and Chevron Australia filed recently with ASIC show the stupendous profits being made and puny taxes being paid by the foreign oil and gas giants in this country. 

For the eight years prior, Exxon had racked up $82bn in total income in Australia without paying a cent in corporate income tax, according to ATO Transparency reports. Both companies, despite their disgraceful records paying tax, are demanding public money from government for carbon capture and storage (CCS) projects.

As Australians prepare for further hikes in their gas bills – and their electricity bills too (gas determines the price of electricity) – they can draw mean comfort from the fact that these multinationals are failing abjectly to pull their weight, to earn or deserve a social licence to operate in Australia.

Their lobbyists too. Meanwhile, gas industry peak body group APPEA (of which they are key financiers), is concealing its own financial statements and no longer files them with the corporate regulators.

Gas lobby APPEA calls for transparency while its own financial reports vanish. What’s the scam?

Yet they bemoan what the mainstream media decry as the “gas tax hike”, a tiny $2.4bn in PRRT which is less a tax increase than an ‘upfronting’ or bringing forward of that tiny $2.4bn by 5 years – tax they were due to pay anyway.

The 2022 financial reports for the oil giants also show ExxonMobil confessing to tax cheating. It is the same sort of caper for which the Tax Office pinged Chevron in historic litigation five years ago, cheating on the price at which they lend money to themselves. Typically this ‘transfer pricing’ of loans entails a foreign entity lending money to an Australian entity at higher interest rates than the local entity needs to pay – therefore the interest is siphoned offshore with no obligation to pay tax.

Among the key nosebleed numbers in their accounts, Chevron showed revenue rising to $16bn in 2022 from $8.7bn the previous year. Profits rose from $4bn to $11.5bn and tax expense from $1.5bn to $3.4bn. Its cashflow statements showed tax paid rose from just $14m to $498m.

Both ExxonMobil and Chevron have been two of Australia’s most egregious tax dodgers for the past decade (see Top 40 Tax Dodgers chart at the bottom of the page). Both are audited by PwC.

The most stunning element of these most recent accounts showed the profits being ripped offshore due to Australia’s weak and highly flawed tax regime. This story by Daniel Bleakley shows what might have happened if Australia had mimicked Norway and its sovereign wealth fund.

A tale of two fossil superpowers: what Australia can learn from Norway

Chevron Australia, although it has finally begun to pay some income tax, funnelled out $7.3bn in dividends to its offshore parent company and a $3.3bn return of capital.

Both companies also helped themselves to dozens of millions of dollars on billions in loans from their offshore related parties (the same thing which has landed them in multi-year disputes with the ATO.

For ExxonMobil’s part, it recorded a rise in revenue from $12bn to $20bn in 2022 thanks to record oil and gas prices arising from the War in Ukraine. Profits jumped from $2bn to $5.6bn and tax expense from $678m to $1.4bn (bear in mind a good part of this is tax paid in PNG and Indonesia).

Its dividends to related parties offshore from rose $2.9bn to $3bn and related party interest expense stood at a towering $557m last year.