Is Exxon Paying a Fair Share of Tax a TJN Report

TO: Senate Standing Committees on Economics PO Box 6100 Parliament House Canberra ACT 2600

9 February 2018

JOINT SUBMISSION OF THE TAX JUSTICE NETWORK – AUSTRALIA (TJN) AND THE MAKE EXXON PAY COALITION TO THE SENATE ECONOMICS REFERENCES COMMITTEE FOR THE INQUIRY INTO CORPORATE TAX AVOIDANCE

Submitted electronically via - [email protected] “ THE CLEAR CONCLUSION OF OUR RESEARCH IS THAT EXXON’S AGGRESSIVE TAX AVOIDANCE IS NOT UNIQUE TO AUSTRALIA BUT A CORE PART OF THE OIL GIANT’S GLOBAL PRACTICES. BY ALLOWING EXXON’S CONDUCT IN AUSTRALIA TO CONTINUE, AUSTRALIAN AUTHORITIES ARE CONTRIBUTING TO EXXON’S GLOBAL TAX AVOIDANCE. ”

1. ExxonMobil Australia Pty Ltd, Annual Report for the period ended 31 December 2016, p.1, Directors’ Report. As obtained from ASIC. 2. Exxon Mobil Corporation, Form 10-K, pp.101-102. https://www.sec.gov/Archives/edgar/ data/34088/000003408817000017/xom10k2016.htm TJN-Make Exxon Pay Senate Submisison on ExxonMobil 09/02/2018

2 3 TJN-Make Exxon Pay Senate Submisison on ExxonMobil 09/02/2018 In this environment, there are major economic As Exxon’s gas operations contribute to a As Exxon’s gas operations contribute Virtually every other country in the world has We acknowledge the work of the Australian We acknowledge the work of the and security implications beyond the scope of this inquiry. Exxon is the largest foreign multinational supplying the domestic gas market and benefits from escalating domestic prices. significant work yet to be done by both the significant work yet to be done in order to ATO and through new legislation a fair share from guarantee that Australians get resources. the exploitation of our finite natural are mentioned Recommended legislative changes in previous TJN here and discussed in more detail submissions to this inquiry. domestic gas significant proportion of Australia’s supply, the issue of its corporate tax avoidance has become increasingly pertinent among a public frustrated by rising energy and gas costs. Customers facing these high prices are demanding to know where the windfall profits are going to. policies in place to guarantee energy security and stable and affordable energy supply. Australia now finds itself dependent on a tax-dodging, price-gouging foreign multinational corporation. Tax Office (ATO) and the significant focus it has Tax Office (ATO) and the significant of multinationals given to aggressive tax practices oil and gas operating in Australia’s offshore progress industry since 2013. While significant the Chevron has been made, most notably with on offshore court case and resulting guidelines there is still related party debt, we believe . This submission provides some . This submission provides some “Is Exxon Paying a Fair Share of Tax “Is Exxon Paying a Fair Share of Tax We strongly support the efforts of this The clear conclusion of our research is that Exxon in Australia operates and owns Exxon in Australia operates and Thank you for the opportunity to make this Thank you for the opportunity corporations exploit on our behalf. of life for all Australians. Every Australian has the right to a share of the wealth generated from the natural resources Exxon and other other public services of adequate funding. These public services improve our nation’s productivity, business climate and the quality operating in Australia. Missing out on billions of corporate income tax revenue deprives our schools, hospitals, infrastructure and committee to shed light on the aggressive tax minimisation practices of major corporations Australia to continue, Australian authorities are contributing to Exxon’s global tax avoidance. to Australia but a core part of the oil giant’s global practices. By allowing Exxon’s conduct in Exxon’s aggressive tax avoidance is not unique significant oil and gas operations. Exxon significant oil and gas operations. to dozens of supplies fuel and motor products the country. 7-Eleven service stations across of tax haven subsidiaries. tax practices in Papua New Guinea (PNG); and tax practices in Papua New Guinea including examines Exxon’s global tax practices, global web in New Zealand, the UK, and Exxon’s in Australia?” Exxon’s tax new and deeper information on Exxon Australia’s affairs in Australia; examines supplements and supports the previous TJN supplements and supports the submission submission with regards to the tax affairs submission with regards to the (“Exxon”) of ExxonMobil Australia Pty Ltd and related companies. This submission UPDATE AND RECAP OF PREVIOUS SUBMISSION/REPORT

The previous submission was written a) How operations in Australia relate to any immediately prior to the third year of corporate operations in foreign jurisdictions, either directly tax data being released by the ATO. As was or through a parent company; widely reported in the media, that data confirmed that Exxon has not paid one cent in (b) How many subsidiaries either ExxonMobil corporate income tax in the last three years on Australia or its parent company have that are total income in Australia of nearly $25 billion related to Australian operations, and where over the three-year period. Exxon is in the top those subsidiaries are located; and tier of all companies operating in Australia. (c) The value of transfers between those Therefore, aggressive tax practices by Exxon related operations for each year over five years would have a large impact. by jurisdiction, and an explanation of the flows As outlined in the previous report, the primary of money between these subsidiaries and the 1 Exxon subsidiary in Australia, ExxonMobil Australian operations. Australia Pty Ltd is immediately owned by Exxon clearly failed to answer the committee’s another Exxon subsidiary in the Netherlands questions by not mentioning the direct (ExxonMobil Australia Holdings B.V.), which is ownership relations through the Netherlands immediately owned by another Exxon subsidiary and the Bahamas. Why is that? Why was Exxon in the Bahamas (ExxonMobil Asia Pacific Holding trying to conceal this information and mislead Limited). the Australian Parliament? What are the Exxon, as with other major oil corporations, consequences for this? was specifically asked by this committee to There are other connections to the Australian “comment on the relationship between … operations in foreign jurisdictions that were Australian operations and associated operations also not disclosed in Exxon’s response to the in foreign jurisdictions” and in “particular, … committee on 18 November 2015. asked to provide information” on:

“Exxon clearly failed to answer the committee’s questions by not mentioning the direct ownership relations through the Netherlands and the Bahamas. Why was Exxon trying to conceal this ...and mislead the Australian Parliament?”

1. These are quotes and a paraphrasing of the questions which were asked of Shell Australia Pty Ltd and repeated in their submission (#119) dated 29 July 2015 to the committee. It is worth noting that Shell did provide detailed information in response to these questions. TJN-Make Exxon Pay Senate Submisison on ExxonMobil 09/02/2018

4 5

TJN-Make Exxon Pay Senate Submisison on ExxonMobil 09/02/2018 EXXON’S PNG OPERATIONS OWNED IN AUSTRALIA HAVE DEEP LINKS TO BAHAMAS

Exxon has another company incorporated in sources explain the purpose of this entity and Australia, called Mobil PNG Gas Holdings Pty allow for the information in the ASIC file to be Ltd, which is not a subsidiary of ExxonMobil interpreted. The ASIC file shows current liabilities Australia Pty Ltd as are most of other Australian (loans) to this company of US$304 million and subsidiaries.2 Two of the 3 directors of this non-current liabilities of US$3,426 million ($3.4 company, including ExxonMobil Australia billion).10 Chairman Richard Owen, are also directors of and senior executives in ExxonMobil Australia A company based in PNG but listed in Australia, Pty Ltd.3 According to the 2016 financial report Oil Search Limited, is a partner in the Exxon of Mobil PNG Gas Pty Ltd, the “entity’s principal operated PNG project. Oil Search has a 29 per activities during the year were associated with cent interest in this Bahamas entity and explains the exploration, extraction, conversion and the purpose of the company as follows: transportation of petroleum and natural gas in “Papua New Guinea Liquefied Natural Gas Papua New Guinea.”4 This Australian company Global Company LDC, is owned by Exxon a limited duration Overseas Investment company incorporated Corporation in “This use of this Bahamas- under the laws of the Delaware, USA; and it based entity is very likely Commonwealth of the owns ExxonMobil PNG to reduce taxable profit Bahamas (the “Borrower”) Limited -the primary was organised to conduct Exxon subsidiary in in PNG and Australia and certain activities of the PNG- and several book profit in the Bahamas PNG LNG Project outside other subsidiaries were the corporate income of PNG, including the incorporated in PNG.5 tax rate is zero.” borrowing and on- Both the Delaware lending to the Project parent, and the participants of the Project primary PNG subsidiary, are disclosed as material Finance Debt Facility, subsidiaries in Exxon’s global 2016 10K (annual and the purchase and re-sale of PNG LNG Project report) filed with U.S. Securities and Exchange liquids and LNG. The Borrower is owned by each Commission, but not the Australian intermediary Project participant in a percentage equal to its company.6 Interestingly, neither the Netherlands interest in the PNG LNG Project… nor the Bahamas companies which own the The liquids and LNG sales proceeds from Australian operations are disclosed.7 However, the PNG LNG Project are received into a sales ExxonMobil Australia Pty Ltd, along with four of escrow account from which agreed expenditure its Australian subsidiaries, are disclosed.8 A 33.2 obligations and debt servicing are firstly made per cent interest in another Bahamas subsidiary and, subject to meeting certain debt service cover with connections to PNG, “Papua New Guinea ratio tests, surpluses are distributed to the Project Liquefied Natural Gas Global Company LDC“ is participants.” 11 also disclosed in Exxon’s SEC filing.9 D This use of this Bahamas-based entity is Little information about this Bahamas-based very likely to reduce taxable profit in PNG and entity is contained in the 2016 financial report of Australia and book profit in the Bahamas were Mobil PNG Gas Pty Ltd filed with ASIC, but other

2. Mobil PNG Gas Holdings Pty Ltd, Annual Report For the Year Ended 31 9. Ibid. December 2016. (obtained from ASIC) 10. Mobil PNG Gas Holdings Pty Ltd, Annual Report For the Year Ended 31 3. Ibid, p.1, Directors’ Report. December 2016, p.22, Note 15, Borrowings. 4. Ibid. 11. Oil Search Limited, Annual Report 2016, p.130, Note 25, Subsidiaries and 5. Ibid, p.26, Note 21, Related party disclosures & p.28, Note 22, Subsidiaries. Interests in Joint Arrangements; p.135, Note 26, Financial and Capital Risk 6. See Exhibit 21 in the attached excel file. Source information is provided in Management. http://www.oilsearch.com/__data/assets/pdf_file/0016/7045/ the file. HC_OSF_AR16_Interactive_v01A.pdf 7. Ibid. 8. Ibid. 6 TJN-Make Exxon Pay Senate Submisison on ExxonMobil 09/02/2018 15. 14. December 2016,p.2, Director’sReport. 13. https://www.osakagas.co.jp/en/whatsnew/1209740_11885.html 12. the 2013-14ATOlist.According totheATOdata, in Australiaforthelast two years,butwasnoton Australia PtyLtd),haspaidcorporateincome tax Mobil PNGGasHoldings(unlikeExxonMobil below) royalties wereonlyUS$1million. only US$7millionand“Governmentother flow statementwere paid fromthecash The incometaxes [US]$52 million”. a taxexpense”of and “recognised Bahamas entity); paid mostlytothe million (presumably expenses ofUS$194 parent; finance to theDelaware million individends in Delaware;US$56 the parentcompany share buybackfrom US$180 millionina These included the reportedprofits. dramatically reduce significant items A numberof US$104 million. profit aftertaxof million in2016and revenue ofUS$983 Pty Ltd,reported PNG GasHoldings Exxon entity,Mobil Company LDCastheseller. Papua NewGuineaLiquefiedNaturalGasGlobal LNG projectandidentifiedtheBahamas-based contracts forlargevolumesofLNGfromthePNG JERA) andOsakaGas)announcedlongtermsales from theBahamasisonawholedifferentscale. marketing ofLNGfromPNGtoAsiacustomers others hasbeenamajorissuefortheATO.The of marketinghubsinSingaporebyExxonand the corporateincometaxrateiszero.Theuse According totheATOcorporatetaxdata, The Australian Two Japaneseutilitycompanies(TEPCO(now Ibid, p.8, Statement ofCash Flows. Ibid, p.1-2,Directors’ Report;p.5,StatementofProfit or Loss. Mobil PNGGasHoldings PtyLtd,AnnualReportForthe YearEnded31 http://www.tepco.co.jp/en/press/corp-com/release/09120701-e.html & 13 14

Oil Search? more aggressive than Australia significantly Exxon’s taxpractices in differences? Are these significant million. What explains on total income of $145 Oil Search of $1.5million to thetaxable income of to $126,053, compared taxable income dropped at $152 million,but total income was larger “In 2014-15 Exxon’s 12

15 (Moreonthis

” year, a20-percentincreaseoverthefacility’s production equivalentof8.3milliontonnesper the PNGLNGprojectwhich“recentlyreached has a33percentinterestandistheoperatorof Financial andOperatingReview,thecompany income andpaidlessthan$38,000intax. 2014-15, thecompanyhad$152millionintotal $123,000 inAustraliancorporateincometax.In $902 millionintotalincomeandpaidlessthan in the2015-16fiscalyear,companyhadover projects/ 19. 18. 17. financial_and_operating_review.pdf http://cdn.exxonmobil.com/~/media/global/files/financial-review/2016_ 16. than anyofExxon’sfilings. OilSearch“delivereda provides greaterinsight intothePNGLNGproject Curtis IslandLNGproject. projects, androughlyequivalenttoQueensland’s Pluto, twootherlargeoffshoreAustralianLNG is roughlydoublethesizeofDarwinLNGand size oftheGorgonproject.ThePNGLNGproject According toExxonMobilCorporation’s2016 Oil SearchLimited’s2016annualreport https://www.appea.com.au/oil-gas-explained/operation/australian-lng- https://www.chevronaustralia.com/our-businesses/gorgon Ibid, p.46. ExxonMobil Corporation,2016Financial andOperatingReview,p.47.

19 suggests thatabout million in2016,this and PNGasUS$300 earnings fromAustralia Corporation reports in Asia.” delivery tocustomers loaded 262cargoesfor tonnes ofLNGand more than19million has safelyproduced To date,theproject original capacity. project isoverhalfthe year. tonnes ofLNGper capacity of15.6million annual production history andhasan project inAustralia’s the largestresource 25 percentinterest-is which Exxonalsohasa Gorgon project-in Chevron operated project incontext,the 2/3 fromAustralia. come fromPNGand 1/3 ofprofitsmayhave

To putthePNGLNG 18 ThePNGLNG 16 ExxonMobil

7 TJN-Make Exxon Pay Senate Submisison on ExxonMobil 09/02/2018

Given the Australian ownership of Exxon’s Given the Australian ownership Oil Search’s Australian subsidiary, Papuan Oil Papuan subsidiary, Australian Oil Search’s Ibid, p.23. Calculations based on percentage ownership. Oil Search Limited, Annual Report 2016, pp.70-71. Ibid, p. 109, 115. from this massive project, but without greater from this massive project, but There are also scrutiny that may not happen. tax revenue. implications here for Australian greater Australia should attempt to show Asia-Pacific region, leadership on this issue in the in PNG, particularly with our closest neighbours Indonesia and New Zealand. no taxable income or tax paid. In the 2014-15 paid. In the 2014-15 income or tax no taxable total $145 million in company had data the and paid of $1.5 million taxable income income, tax in Australia. in corporate income $457,100 the company had $141 In the 2013-14 data, $38 million in taxable million in total income, over $11 million in corporate income and paid numbers are very different income tax. These in numbers above. In particular, from the Exxon total income was larger at $152 2014-15 Exxon’s income dropped to $126,053, million, but taxable of taxable income of Oil Search compared to the total income of $145 million. What $1.5 million on Exxon’s Are differences? significant these explains more tax practices in Australia significantly aggressive than Oil Search? Exxon’s tax PNG operations, the impact of examined practices in PNG should be thoroughly is a major by Australian authorities. There to benefit opportunity for the people of PNG Search Limited, is listed in the ATO’s 2015-16 2015-16 ATO’s in the is listed Limited, Search and in total income with $163 million tax data 24. 25. 26. 27.

22 As 27 Over 77 Over 77 21 Despite 26 Oil Search’s 23 This suggest 24 The profit was derived was derived profit The 20

While this is clearly a 25

Ibid, p.23; TEPCO’s long term contract to purchase LNG from PNG was Oil Search Limited, Annual Report 2016, p.12, Letter from the Chairman. Ibid, p.69. Ibid, p.22. According to the cash flow statement, Oil Oil Search reported debt on the PNG LNG Oil Search reported debt on the According to the Oil Search 2016 annual According to the 23. mentioned above. TEPCO (Tokyo Electric Power Company) and Chubu Electric joined together to create JERA, which is now one of the world’s largest buyers of LNG. http://www.jera.co.jp/english/ 20. 21. 22. Search, even though they use the same Bahamas structure? and other stakeholders. Are Exxon’s tax practices in PNG significantly more aggressive than Oil on its larger stake in the project. While there are many possible explanations, this is a huge difference in payments to the PNG government paid US$5.4 million in royalties and levies. mentioned above, Exxon paid only US$7 million in income taxes and US$1 million in royalties Search paid US$41.3 million in income tax and the PNG partnership, the reported debt is a little the PNG partnership, the reported roughly but above), (discussed Exxon’s larger than in line. US$289 million of this debt in 2016. ownership in Oil Search’s smaller percentage of aggressive tax avoidance led by Exxon. of aggressive tax avoidance led repaid over project of over US$3.9 billion and is not clear how much the people of PNG have is not clear how much the people greater scrutiny benefitted, or will benefit without from these customers would be nearly US$2.5 from these customers would be billion in 2016 alone. its partners, it profitable project for Exxon and that Exxon’s 33.2 per cent interest would give that Exxon’s 33.2 per cent interest from these 4 it US$813.7 million in revenue revenue customers and that the total project revenue from its 29 per cent interest in the revenue from its 4 customers PNG LNG project from just these was US$710.8 million in 2016. and CPC (Taiwan) are also major purchasers of are also major purchasers of and CPC (Taiwan) market. LNG from the Australian under long term contracts that purchase the under long term the project. These customers, bulk of LNG from Jera (Japan), Osaka Gas (Japan) Sinopec (China), report, PNG LNG has 4 primary customers report, PNG LNG 29 per cent interest in the PNG LNG project. interest in the 29 per cent There are in PNG, including sites other production holds an interest. which Exxon also some in global oil and gas prices”. oil and global million. revenue of US$1,236 from total Oil Search’s was from of total production per cent core profit of US$106.7 million, despite depressed depressed despite million, US$106.7 of profit core 8 TJN-Make Exxon Pay Senate Submisison on ExxonMobil 09/02/2018 2015. by revenuein2016,downfrom13thplace Deloitte asNewZealand’s14thlargestcompany operations. Thiscompanywasrankedby the parentcompanyforallNewZealand of ExxonMobilNewZealandHoldings(EMNZH), operations. has sharesinarefineryandcoastalshipping operates storageterminals,apipelineand over 150unbrandedsites. 121 Mobilownedorleasedsitesandsupplies approximately 170Mobilbrandedsites;including supplies anationwidepetrolstationnetworkof 1896 andisaleadingsupplieroffuel. oil companieswithapresencebeginningin Zealand Limitedisoneofthecountry’soldest production inNewZealand,butMobilOil Exxon isnotcurrentlyinvolvedinoilorgas from alargedownstream(retail)business. in NewZealand2016,despitemajorrevenues (TAX-FREE) OPERATIONS EXXON’S NEWZEALAND companies/1846798/24574096/ 34. 33. 32. 200-rankings.pdf 31. 30. 29. locations/new-zealand/about/business-overview 28. Mobil OilNewZealandLimitedisasubsidiary No corporateincometaxwaspaidbyExxon http://app.companiesoffice.govt.nz/companies/app/ui/pages/ Ibid. Ibid. https://www.top200.co.nz/wp-content/uploads/Top-200-Awards-2016-Top- Ibid. Ibid. http://corporate.exxonmobil.com/en/company/worldwide-operations/

TheDeloitterankinghas twootherlarge

29 Additionally,Exxon

28 Exxon petrol retailers,BPNewZealandHoldings(#11) other products(NZ$1,329 m)andsalestax composed ofthecostbuyingcrudeoiland operating profitofonlyNZ$91million. had totalrevenuesofNZ$2.2billion,butafter tax statement ofEMNZH,thegroupcompanies neighbours ofvitalcorporatetaxincome. corporate taxavoidanceanddeprivingour citizens whomaybeengagedinfacilitating should beconcernedaboutanyAustralian Australia PtyLtd. is alsoadirectorofsubsidiaryExxonMobil EMNZH hasoneAustralian-baseddirectorwho have relocatedfromTexastoDelawarein2017. Petroleum CompanyInc.,whichwasreportedto intentional shiftingofprofits? Why isthat?PoormanagementbyExxonoran Z Energy#43comparedtoEMNZHat#202. profits. higher revenues,butsignificantlyafter-tax and ZEnergyLtd(#12),whichhadmarginally 37. documents/2A1F1BBF81D5DF1982D1B744EC502E7A app.companiesoffice.govt.nz/companies/app/service/services/ Statements FortheYearEnded31December 2016,p.1.https:// 36. companies/1846798/24373412/ 35. Eighty-seven percentofthesalesrevenuewas According tothe2016annualfinancial EMNZH is100percentownedbyMobil Ibid. ExxonMobil NewZealandHoldings, Consolidated Financial http://app.companiesoffice.govt.nz/companies/app/ui/pages/ 32 DeloitterankedBP#25inprofitand 35 TheAustralianGovernment

9 TJN-Make Exxon Pay Senate Submisison on ExxonMobil 09/02/2018 While this 42

This subsidiary is 43

In January 2017, after the 2017, after the In January 41 ” Ibid, p.18, Note 5, Related Party Transactions. Ibid, p.1, Directors’ Report. Ibid, p.26, Note 23, Subsequent Events. The potential of lost tax revenue in New The potential of lost tax revenue The final note to the financial statement reveals The final note to the financial The financial statements of Exxon New Exxon of statements financial The 41. 42. 43. Zealand due to aggressive tax minimisation Zealand due to aggressive tax be strategies is significant and should begin work investigated further. The ATO must authorities, in cooperation with regional tax Indonesia particularly in PNG, New Zealand, corporate and Singapore, to examine Exxon’s NZ$796.5 million in interest bearing loans with bearing loans million in interest NZ$796.5 parties. related “the group finalised financial year, end of the and facilities of its cash management a review million of its existing long-term repaid NZ$442 a halving of its long borrowings representing debt levels. The group also term intercompany enduring finance facility with entered into an It is anticipated that these a related party…. be more cost effective by arrangements will overall interest expense reducing the group’s of more efficient management and will enable requirements.” the group’s financing 2016 year, it is very likely to did not impact the tax liability in 2017 eliminate any possible income tax incomes and drastically reduce governmental in future years as well. is with ExxonMobil that the new financing facility Keystone Finance Company. (see attached list also incorporated in Delaware. of Delaware subsidiaries) Zealand also indicate that the company had had company that the indicate also Zealand

This appears 40

Despite assurances that assurances Despite 37

The cash flow statement does not show The cash flow statement does The financial statement has no statement The financial 39 38

throughout the region. throughout transactions and aggressive tax planning and aggressive transactions tax payments corporate be reducing may structure and how related party related and how structure in PNG, New Zealand, Indonesia and Zealand, in PNG, New corporate Exxon’s examine to Singapore, “The ATO must begin work in cooperation in cooperation begin work must “The ATO particularly tax authorities, with regional Ibid, p.6, Cash Flow Statement. Ibid, p.17, Note 3, Income Tax Expense. Ibid, p.18, Note 5 Related Party Transactions states that there was $1,245.3 The taxable profits in New Zealand were The taxable profits in New Zealand million in purchases of goods from related parties. 39. 40. 38. Australia - non-existent. to indicate that Exxon’s corporate income tax to indicate that Exxon’s corporate similar to those in payments in New Zealand are notes to the financial statements have a “-" in notes to the financial statements of the current the line for “current tax in respect year” for both 2016 and 2015. parties. there are tax any income tax payments. While taxes, the expenses and expenses for deferred further reduced by NZ$50 million in (tax free) further reduced by NZ$50 million parent company dividends paid to the Delaware to related and $26.3 million in interest payments Singapore in 2016. 28 per cent and Singapore’s 17 per cent) and 28 per cent and income tax in may not have paid any corporate another subsidiary in the Bahamas, has another subsidiary tax rates of 5 per cent negotiated concessionary in Singapore (compared to NZ’s and 10 per cent in Australia, is ExxonMobil Asia Pacific Pte Ltd Asia Pacific Pte Ltd in Australia, is ExxonMobil discussed in the previous in Singapore. As subsidiary is owned through submission, this where they may be located. For the purchase where they may products, it is very likely of crude and other trading partner, as is the case that the primary parties. or related parties on any of the information these purchases were “based on independently on independently “based were purchases these about pricing” traded commodity and globally were from related of purchases 94 per cent duties (NZ$607 m). (NZ$607 duties 10 TJN-Make Exxon Pay Senate Submisison on ExxonMobil 09/02/2018 31 January2018. overview?parentId=2b10eac0-2d5a-421b-b175-bd0e5709e965 ;accessedon 47. 46. 45. converted usingcurrentexchangerate of1GBP=1.76AUD 44. were reported.Anoteexplains that“netrefunds AUD$283.7 million. (HMRC) totallingnearlyGBP161.6millionor refunds for3projectsfromtheUKtaxauthority and ProductionUKLimitedreceivednettax ExxonMobil hasaproblemwithtransparency. than informationsuppliedbyExxon.Clearly, largest producer)arefarmorecomprehensive controlled oilcompanythatisnowtheUK’s Chinese-government and CNOOC(the Exxon’s partnerShell, government, including companies totheUK supplied byother the information worth notingthat as possible.Itis amount ofdisclosure to providetheleast by law,Exxonappears basis. on aprojectby Exxon’s UKoperations made (ornotmade)by tax paymentswere exactly whatincome disclosure, weknow of theUK’smandatory mandatory disclosurelawsinplace.Asaresult possible. Canada,theEUandUKalreadyhave to implementmandatorydisclosureassoon government toengageinbi-partisandialogue position oftheALPandweencourage operating inAustralia.Thisisalreadyapolicy large resourcecompaniesbasedinAustraliaor disclosure ofallpaymentstogovernmentsfor Australia mustimmediatelyadoptmandatory by PublishWhatYouPay(PWYP)–Australia, and discussedindetailthesubmission LESSONS FOR AUSTRALIA? EXXON’S UKPRODUCTION: http://www.exxonmobil.co.uk/en-gb/company/uk-operations/operations/ ExxonMobil Corporation, 2016FinancialandOperating Review,p.35 Ibid. https://extractives.companieshouse.gov.uk/company/00207426 ;numbers In 2016,Exxon’ssubsidiaryEssoExploration Even whenrequired As recommendedintheprevioussubmission

44 Nootherfeesorpayments supplied by Exxon. than information far more comprehensive largest producer) are that isnow theUK’s controlled oilcompany Chinese-government Shell, andCNOOC(the including Exxon’s partner the UKgovernment, by other companies to “Information supplied

Revenue)” Related Information (Schedule OfGeographic SalesAndOther Operating Financial_Report.xlsx ;dataintablabelled,“Disclosures AboutSegmentsAnd 51. overview 50. 49. marketing/overview 48. “approximately fivepercentofUKoilandgas companies UKwebsite,Exxonisresponsiblefor cubic feetofgasperday.” barrels ofliquidsperdayand307million production fromthesefieldswas40thousand joint venturewithShell.In2016,averagenet fields intheNorthSea,principallythrougha company has“interestsinabout40producing tax refundsfromtheUKgovernment, in arefundoftaxespaidprioryears.” result fromthecarrybackoftaxlosses,resulting detailed explanationof theseregimes. Oxford InstituteforEnergyStudiesprovidesa for oilandgasproduction. already haveexceedinglygenerousfiscalregimes rates intheUKandAustralia,bothcountries companies tolowerapplicabletaxandroyalty continuing effortsbyExxonandotheroil least supportfromourgovernments.Despite generous tothecompanieswhodeserve and Australiashareaproblem:wearefartoo https://www.sec.gov/Archives/edgar/data/34088/000003408817000017/ http://www.exxonmobil.co.uk/en-gb/company/uk-operations/gpm/ Ibid. http://www.exxonmobil.co.uk/en-gb/company/uk-operations/refining-and- While ExxonMobilisgettingcorporateincome The submissionbyJuanCarlosBouéofthe

”

production. policies foroilandgas with Australia’sfiscal there aresimilarities planning. Unfortunately, Exxon’s aggressivetax production, ratherthan regime foroilandgas incredibly generous fiscal is likelytobetheUK’s of thesetaxrefunds feet ofgasaday.” and 441millioncubic of 80,000barrelsoil markets withanaverage the UKandinternational production, supplying 46 The UnitedKingdom The primarydriver Accordingtothe 45

11 TJN-Make Exxon Pay Senate Submisison on ExxonMobil 09/02/2018

59 Exxon later 60 This is the lowest 57

The entire income of the company is The entire income Exxon also has a law suit against the Exxon also has a law suit against 55 58 The company’s own estimate of its The company’s own estimate of its Exxon was also in a recent legal dispute

tax disputes as well.) effective tax rate in 2016 was 13 per cent; effective tax rate in 2016 was 13 suggest however, independent estimates -5.1 that the real effective tax rate was of per cent with Exxon getting a US refund US$406 million in 2016. except tax rate of any major US company, GE. seeking IRS, the US tax authority, which is US$1.35 billion in tax refunds. with a local government in the Houston area over property taxes for a new corporate campus. Exxon contested the assessed value but refused to provide company documents to supporting documents. dropped the lawsuit against the county the day before it would have been ordered to hand over company documents. (As discussed below, Exxon has resisted providing company documents in Australian US TAX REFUNDS REFUNDS US TAX IN -5.1% RESULT RATE TAX EFFECTIVE While some of the Esso UK Limited subsidiaries Esso UK Limited subsidiaries While some of the https://www.dallasnews.com/business/exxon-mobil/2017/11/03/exxon- Ibid. https://www.washingtonpost.com/news/wonk/wp/2017/08/21/irs-whistle- http://www.houstonchronicle.com/business/real-estate/article/Exxon- http://www.chron.com/business/real-estate/article/Exxon-Mobil-backs-off- income statement shows pre-tax profits of GBP pre-tax profits statement shows income and million in 2016 and GBP 178 630 million of and tax refunds or credits 2015, respectively, 3 million, which increased take- GBP 4 million and GBP 634 million and GBP 181 home profits to million. from UK subsidiaries and derived from dividends to corporate income tax. therefore not subject income tax it is remarkable that may have paid in revenues US$17.9 billion and US$23.7 billion or refunds. can result in millions in tax credits 57. mobils-tax-rate-last-year-really-51 58. 59. blower-who-questioned-paper-industry-tax-break-fights-to-keep-his-job/?utm_ term=.29af179b623a 60. Mobil-s-property-tax-dispute-with-appraisal-8353382.php 61. from-property-tax-dispute-9198145.php

The filing 54

These UK indirect 52 Exxon also owns Exxon also owns

48 Exxon also claims that Exxon also claims

49 Exxon has other chemical 53 50

A significant amount of this revenue must A significant amount of this revenue

The 2016 annual report for Esso UK Limited Esso UK Limited, which is owned by Esso Esso UK Limited, which is owned ExxonMobil Corporation’s 2016 Financial ExxonMobil Corporation’s 2016 Exxon has large operations in the UK beyond in the UK beyond large operations Exxon has Esso UK Limited, Annual Report and Financial Statements for the Year Ibid, p.9. Ibid, p.13, Note 6, Income from Fixed Asset Investments; p.14, Note 9, http://corporate.exxonmobil.com/en/company/worldwide-operations/ Esso UK Limited, Annual Report and Financial Statements for the reports after tax profit for the year of GBP 634 million and GBP 181 million in 2015. does not contain a cash flow statement, but the companies in the UK. holds investments in others. and direct subsidiaries appear to be all of the ExxonMobil Corporation’s principal operating UK Limited, International Marine Transport Limited, Mobil Trading and Supply Limited and indirectly owns eight other companies and Esso Exploration and Production UK Limited, ExxonMobil International Limited, ExxonMobil Holding Company U.K. Inc. in Delaware, is the Holding Company U.K. Inc. in Delaware, subsidiaries holding company for most Exxon owns: with UK operations. Esso UK Limited involved in North Sea oil and gas production. involved in North Sea oil and gas US$23.7 billion in 2015, and US$31.3 billion in US$23.7 billion in 2015, and US$31.3 2014. subsidiaries not have been generated by Exxon Report states that sales and other revenue from Report states that sales and other down from the UK was US$17.9 billion in 2016, production and distribution and transportation production and distribution and businesses in the UK as well. gas market in the UK, which is Europe’s largest gas market in the UK, which is user of natural gas.” it’s UK-based marketing business “is the world's business “is the world's it’s UK-based marketing of natural gas” largest non-government marketer per cent “of the sales represent 18 that Exxon and “processes some 270,000 barrels of crude oil “processes some around 20 per cent of the a day and provides UK's refining capacity.” through our retail network of around 1,100 Esso- through our retail stations.” branded service UK’s largest refinery which and operates the its interests in North Sea oil and gas production. oil and gas production. in North Sea its interests states that the company is Exxon’s UK website petrol retailers in the UK… “one of the largest VANISHING DOWNSTREAM? VANISHING EXXON’S UK REVENUE: REVENUE: UK EXXON’S Taxation. 54. Ended 31 December 2016, p.1, Directors’ Report. 55. 56. Year Ended 31 December 2016, p.15, Note 10, Fixed Asset Investments. https://beta.companieshouse.gov.uk/company/01589650/filing-history/ MzE4NjAxNTM2NGFkaXF6a2N4/document?format=pdf&download=0 53. locations/united-kingdom/about/overview 52. 12 TJN-Make Exxon Pay Senate Submisison on ExxonMobil 09/02/2018 interest charges. million andpaid$43.2 million inrelatedparty received dividendsfromsubsidiariesofUS$75 The companyhadnetassetsofUS$21.4billion, company inLuxembourg,ofUS$50million. paying outdividends,presumablytotheparent an after-taxprofitofUS$38.7millionafter Luxembourg. Holdings LuxembourgInternationalS.a.r.l.in Company LimitedisownedbyExxonMobil Malaysia, IndiaandtheBahamas. companies inHongKong,Singapore,China, Kong andindirectlyownsinterestsinmanyother directly ownstwoothercompaniesinHong parent company. Bahamas-based companieshavethesameUK Investments Limitedin2015.Apparently,both company weretransferredtoEssoGlobal billion fromtheBahamasparenttoSingapore previous submission,loansofmorethanUS$7 Limited intheBahamas. also directlyownsEssoGlobalInvestments region. ExxonMobilHoldingCompanyLimited Zealand andothercountriesintheAsia-Pacific trading partnerofExxonsubsidiariesinNew previous submissionandislikelytobethelargest partner withExxon’sAustralianoperations. Pacific PteLtdinSingapore,thelargesttrading Bahamas, whichdirectlyownsExxonMobilAsia owns EssoHoldingCompanySingaporeLtdinthe and thebroaderAsia-Pacificregion. connect backtoExxonoperationsinAustralia UK, butnotpartoftheUKcorporatestructure, AND ASIA-PACIFIC CONNECT TO AUSTRALIA EXXON’S UKSUBSIDIARIES 66. 65. 64. 63. MzE4MDE1MTc5MWFkaXF6a2N4/document?format=pdf&download=0 https://beta.companieshouse.gov.uk/company/08559280/filing-history/ Year Ended31December2016,p.15, Note12,FixedAssetInvestments. 62. Ibid. ExxonMobil HoldingCompanyLimitedreported In turn,UK-basedExxonMobilHoldings ExxonMobil HoldingsCompanyLimitedalso The Singaporecompanyisdiscussedinthe ExxonMobil HoldingCompanyLimiteddirectly Other Exxonsubsidiariesregisteredinthe Ibid, p.1, Directors’ Report. Ibid, p.19, Note20,Controlling Party. Ibid. ExxonMobil HoldingCompanyLimited, FinancialStatementsforthe

67 Onceagain,thecompany does

Asdiscussedinthe 64

66 62

US$206 million,wasfrom“Australasia”andthe 2016. to havegeneratedturnoverofUS$299millionin billion in2015. “Intercompany loans”,downslightlyfromUS$6.6 Company LimitedhadalmostUS$6billionin Company Limited. is aholdingcompanyforExxonMobilFinance ExxonMobil UK FinanceHoldings Inc. inDelaware- Investment CompanyLimited-ownedby profits. US$4.6 millionin2015,whichincreasereported shows ataxcreditofUS$8.7millionin2016and actual taxespaid,buttheincomestatement not provideacashflowstatementtodetermine Pacific region,iftheyare notdoingsoalready. in theUK,AustraliaandelsewhereAsia- and howitmaybeimpactingrevenuecollections exchange informationonExxon’staxplanning and GBP34.8millionin2015. Account showslossesofGBP6.7millionin2016 very limitedinformation.TheProfitandLoss The company’s2016financialstatementprovides oversight ofpetroleumoperationsinIndonesia. the companyisinvolvedinmanagementand the UKbutincorporatedinCaymanIslands; Australia? loans usedforaggressivetaxminimisationin higher thannormalcommercialloans.Arethese 6.940 percent. include loans”thatrangefrom5.710percentto amounts “repayableaftermorethanfiveyears if nottheonlyone.Disclosedinterestrateson Australasia, butAustraliaislikelytooneofthem, There isnofurtherinformationoncountriesin “Analysis ofturnoverbycountrydestination”. remainder fromtheMiddleEast,accordingto MzE4NTk2ODk2MmFkaXF6a2N4/document?format=pdf&download=0 https://beta.companieshouse.gov.uk/company/05298041/filing-history/ incorporation see attachment onsubsidiaries)andp.3, StrategicReport. Year Ended31December 2016,p.19,Note20,Controlling Party(forDelaware 69. 68. 67. Another UKincorporatedcompany,ExxonMobil The committeeshouldencouragetheATOto ExxonMobil OilIndonesiaInc.isregisteredin ExxonMobilInvestment CompanyLimited,FinancialStatements forthe Ibid,p.7,StatementofComprehensive Income. Ibid,p.3,StrategicReport. 71 68 Sixty-ninepercentofthisturnover,or

70 73 Theserelatedpartyloansappear Theseratesappeartobefar 69

In2016,ExxonMobilFinance

72 74

13 TJN-Make Exxon Pay Senate Submisison on ExxonMobil 09/02/2018 ”

70 subsidiaries in Panama (1 connected to 70 subsidiaries in Panama (1 connected Indonesia) (as 69 subsidiaries in the Netherlands indicated in the previous submission there are hundreds of Exxon subsidiaries incorporated in the Netherlands) 39 subsidiaries in Luxembourg 18 in the Cayman Islands (7 connected to Indonesia) 1 in Curacao • • • • • A final spreadsheet, also attached, contains Another attached spreadsheet, based Another attached contains a list Another attached spreadsheet https://beta.companieshouse.gov.uk/company/FC027215 ExxonMobil Oil Indonesia Inc., Financial Statements for the Year Ended 31 https://offshoreleaks.icij.org/nodes/20157903 in Bermuda and the Cayman Islands (both related to Indonesia). of Exxon subsidiaries in other tax havens from of Exxon subsidiaries in other tax Dato Capital a search conducted through the website. This list identifies: a list of 157 Exxon subsidiaries as disclosed in Exhibit 21 of ExxonMobil Corporation’s 10K (annual report) filed with the US Securities and Exchange Commission (SEC). The list has been sorted by country. Exxon discloses only 49 subsidiaries in Delaware, 21 in the Bahamas, 8 in the Netherlands, 2 in Luxembourg and one each Bermuda, provides a list of 24 Exxon subsidiaries a list of 24 Exxon subsidiaries Bermuda, provides which relate to Indonesia. in Bermuda, 6 of Delaware on a search of the website of the Corporations, Department of State: Division of subsidiaries, provides a list of 365 Delaware Ltd, including Esso Australia Resources subsidiary incorporated in 1963, one other to connected to Australia and 5 connected Indonesia. 74. 75. December 2016, p.1, Profit and Loss Account. https://beta.companieshouse. gov.uk/company/FC027215/filing-history/MzE5NTA4MzA0MmFkaXF6a2N4/ document?format=pdf&download=0 76.

8 companies connected to Indonesia 6 companies connected to PNG and 2 companies connected to New Zealand.

those that can be identified from other sources. from can be identified that those “There is stark difference in the number of of in the number difference stark is “There and in tax havens reports Exxon that companies One attached spreadsheet, based on a search • • • The Bahamas leak list from the ICIJ Offshore While some of the Bahamas companies may While some of the Bahamas companies The previous submission reported that a The previous submission Ibid, p.13, Note 3, Turnover. ExxonMobil Finance Company Limited, Financial Statements for the

Ibid. Ibid, p.19, Note 16, Loans. of the website of the Registrar of Companies in leaks database includes: subsidiaries in the Bahamas. Guinea Liquefied Natural Gas Global Company LDC. This entity is listed in the Offshore Leaks database, but not included in the list of 575 Exxon One example is the subsidiary discussed above in relation to Exxon’s PNG investment, Papua New be de-registered or no longer active, there are be de-registered or no longer active, subsidiaries likely to be many additional Exxon in the Bahamas that are not so easily identified. removed from these lists. in Barbados and British Anguilla that also appear in Barbados and British Anguilla to be to be active. Subsidiaries that appeared stations were connected to individual petrol Bahamas based subsidiaries from other ICIJ leaks. Bahamas based subsidiaries from (Group) This list also includes: Esso International other subsidiaries Ltd. in the Cayman Islands and in an excel spreadsheet. The primary list of 571 in an excel spreadsheet. The primary Bahamas leak, Bahamas subsidiaries is from the (not closed) a separate tab shows 4 additional companies with apparent ties to Australia. That companies with apparent ties to to this submission list is included as an appendix database revealed a total of 575 companies database revealed the names in the Bahamas beginning with including two ExxonMobil, Esso, Exxon and Mobil, search of the International Consortium of search of the International (ICIJ) Offshore Leaks Investigative Journalist’s MzE4NTk2ODk2M2FkaXF6a2N4/document?format=pdf&download=0 71. 72. 73. 70. Year Ended 31 December 2016, p.21, Note 20, Related Party Transactions. https://beta.companieshouse.gov.uk/company/05298032/filing-history/

TAX HAVEN SUBSIDIARIES HAVEN TAX EXPOSING EXXON’S EXXON’S EXPOSING 14 TJN-Make Exxon Pay Senate Submisison on ExxonMobil 09/02/2018 PetroleumResourceRentTax/Pages/PRRTHistory.aspx Rent Tax”, https://industry.gov.au/resource/Enhancing/ResourcesTaxation/ 79. 78. respect ofExtractive ActivitiesYearendedDecember31, 2016,p.2. 77. Esso, thedecisionwas appealed, butultimatelya dispute. Independentarbiters foundinfavourof the PRRTandarbitrationbegantoresolve to increasethesalespricecovercostof prices. state-owned utilitiesintheformofincreased gas shift theincreasedcostfromPRRTto under existingsalescontracts,attemptedto Victorian governmentownedutilities. 1990-91. existing royalty/exciseregimetothePRRTin in BassStrait,ledbyEsso,switchedfroman became effectiveinJanuary1988,butproduction and producingoperationsinAngola,Germany, et CieSCA(“ELEC”)anditssubsidiariesownoil industries, revealsthatExxonMobilLuxembourg directives formandatorydisclosureextractive not, whatisthepurpose? of thesecompaniestominimisetaxpayments?If for USlistedcompanies.Istheprimarypurpose There isnorequirementtoreportallsubsidiaries those thatcanbeidentifiedfromothersources. companies thatExxonreportsintaxhavensand IN AUSTRALIA EXXON (ESSO) TAX HISTORY The PetroleumRentResourceTax(PRRT) A recentreport,preparedpursuanttoEU There isstarkdifferenceinthenumberof Department ofIndustry website,“ThehistoryofPetroleum Resources Ibid, p.3. ExxonMobil LuxembourgetCie,Report onPaymentstoGovernmentsin 81

ThepublicutilitiesdisputedEsso’sability 79 Esso’smajorcustomersweretwo

80 Esso,

transparency andreducecorruption. mandatory disclosureregulationstoincrease basis, thensurelyAustraliacanadoptsimilar extractive companiesonaprojectby disclosure ofpaymentstogovernmentsby subsidiaries. the immediateparentcompanyoranyof Texas intheUSA.” parent isExxonMobilCorporationinIrving, intermediate holdingcompany”andthe“ultimate This Luxembourgentityisdescribedas“an Guyana, IvoryCoastandtheNetherlands. 82. 81. general-interest/esso-bhp-resolve-victoria-tax-dispute.html dispute”. http://www.ogj.com/articles/print/volume-94/issue-51/in-this-issue/ 80. charged bythecompany. Exxonhascontinued Exxon’s royaltiesthrough increasedgasprices may actuallyhavepaidasignificantamount of customers inVictoriaandelsewhereAustralia PRRT royaltypayments;residentialandindustrial industrial users.” until 2001forresidentialgasand2000 be “nochangeinthepriceofgassupplied… and agreementswerereachedthattherewould past andfuturePRRTclaimsonBassStraitgas” government agreedtopay$450million“for settlement wasnegotiatedin1996.TheVictorian If Luxembourg,canimplementmandatory While Exxonclaimstohavepaidbillionsin Ibid. Ibid. Oil andGasJournal,16December1996, “Esso,BHPresolveVictoriatax

82 78 Thereisnoinformationon

15 TJN-Make Exxon Pay Senate Submisison on ExxonMobil 09/02/2018

89 Esso’s 88

In addition to contesting PRRT assessments through the federal courts, Exxon has also contested income tax payments as well. Esso refused to provide relevant documents to prove its case against the ATO because it claimed those documents were upheld the decision upheld the decision for the Commissioner of Taxation. attempts to deduct “various office facility, administrative and accounting expenditures, service fees and mutualised research costs” from taxable profit under the PRRT were rejected by the ATO. The Esso Australia letter/ The Esso 86

” 87

Ibid. Australian Tax Office, Decision Impact Statement, Esso Australia Resources Ibid. http://www.judgments.fedcourt.gov.au/judgments/Judgments/ Given the complexity of these legal cases, we In a separate case in 2012, but also concerning in 2012, but also concerning In a separate case consistent and ongoing efforts to aggressively reduce tax obligations in Australia. 87. 88. Pty Ltd v. Commissioner of Taxation. http://law.ato.gov.au/atolaw/view. htm?docid=LIT/ICD/VID630-631of2011/00001 89. 90. fca/single/1998/1998fca1655 or https://www.ato.gov.au/law/view/ document?DocID=JUD%2F40ATR512%2F00001 or http://www.austlii.edu.au/ au/journals/SydLRev/1999/25.html covered by client legal privilege. strongly encourage the committee to request from the ATO a briefing of the history and current status of all legal disputes with Exxon subsidiaries in Australia. As these court cases are in the public domain, the ATO should be able to comment. This history should provide insight into Exxon’s relationship with the ATO and the oil giant’s 1991 through to 2006. … The ATO did not make … The ATO did to 2006. 1991 through when it until 2004, on ‘taxing point’ any rulings of tax for the years Esso’s objections rejected to 2002.” from 1991 it that “Esso is of the view that submission states overpaid tax in the twelve years has significantly in dispute.” the Federal Court refused Esso’s PRRT payments, appeal to the High Court and special leave to the ‘taxing point’ in the Bass Strait project since project Strait the Bass in ‘taxing point’ the of tax’ from ‘years to all objected and has 1994

The 83

contest their PRRT and contest tax bills by corporate taking the Australian court. to Government residential and industrial and industrial residential and in Victoria customers in Australia elsewhere paid actually have may of a significant amount through royalties Exxon’s gas prices increased the company. by charged to has continued Exxon “While Exxon claims “While Exxon in paid billions have to payments; PRRT royalty The submission goes 85

John R Dashwood, Chairman, Esso Australia Pty Ltd, 26 October 2011, Ibid. David Bennett Q.C., Owen Dixon Chambers West, Melbourne, ACLN – Issue Ibid. According to a 2011 letter and submission from Exxon has been An aspect of the arbitration between the between the of the arbitration An aspect 85. Letter and Submission – Tax Laws Amendment (2011 Measures No.8) Bill 2011. https://www.aph.gov.au/Parliamentary_Business/Committees/House_ of_Representatives_Committees?url=economics/tax%20laws/subs/sub07.pdf 86. 83. #49, 1996, “Public Interest, Private Arbitration and Disclosure”. http://www. austlii.edu.au/au/journals/AUConstrLawNlr/1996/54.pdf 84. Federal Court decision”. on to state that the “Esso has been in dispute with the ATO on the precise identification of been in dispute with the ATO “since shortly after [Bass Strait] was brought into the PRRT regime in 1991” and the company was appealing “a recent the then Chairman of Esso Australia Pty Ltd to the House of Representatives, the company has how much has the ATO spent in dealing with Exxon’s claims? spent in legal costs challenging the ATO and in order to avoid tax obligations in Australia. How much has Exxon but to indicate the extensive legal measures that Exxon has taken disputes or whether they have been resolved or how they were resolved, years. The purpose here is not to understand the current status of these litigation over tax issues with the ATO for many involved in extensive confidentiality and could confidentiality be shared with the Minister and others. appeal and maintained that documents produced that documents produced appeal and maintained by Esso in arbitration to were not subject government minister, the commercially-sensitive the commercially-sensitive government minister, calculations revealed.” information the dismissed with costs Esso’s high court ultimately claim unless [the public utilities] agreed not to public utilities] agreed not to claim unless [the else, including the responsible disclose to anyone Victorian government and Esso also made its Esso also made government and Victorian “to Esso refused high court because way to the its supporting details of calculations disclose taking the Australian Government to court. Government the Australian taking to contest their PRRT and corporate tax bills by tax bills and corporate PRRT their to contest 16 TJN-Make Exxon Pay Senate Submisison on ExxonMobil 09/02/2018 fair share.It’stimetoMake ExxonPay! multinationals likeExxonMobilstarttopaytheir significant competitivedisadvantage. structures intaxhavens,willremainata without theabilitytocreatecomplexcorporate share oftax,particularlydomesticcompanies schemes. Companiesthatdoapayfair likley tousethesameaggressivetaxavoidance obligations othermultinationalsaremore Australia andaroundtheworld. tax minimisationoravoidancestrategiesin like Exxonthatcontinuetopursueaggressive must berealconsequencesforcompanies in Australianeedstobequestioned.There Exxon. inadequately dealtwithcorporationslike Zealand. the world,includinginAustraliaandNew in aggressivecorporatetaxavoidanceacross Our researchindicatesExxonMobilisengaged Conclusion and New Zealand. including inAustralia across theworld, tax avoidance aggressive corporate engaged in ExxonMobil is Conclusion: It istimeforallofustodemandthat If Exxonisallowedtocontinueavoidtax Exxon’s continuedsociallicensetooperate Australia andothercountrieshave

3. 2. 1. Recommendations 7. 6. 5. 4. Ensure thattheAustralianGovernment, the Parliament; losses, etc.),withchangesswiftlylegislatedby expenses (directandindirect),carryforward marketing hubcharges,legalcosts,lobbying (such astransferpricing,related-partyloans, aggressive taxavoidanceandprofitshifting to fitwithcommunitystandardsavoid and reducetheallowablelistofdeductions Review alldeductionsusedbycorporations (PRRT, corporateincometax,dieselrebates); governments onaproject-by-projectbasis to discloseallpaymentsmadeandfrom in Australia’soffshoreoilandgasindustry, resource companies,includingthoseengaged disclosure reportingregimesthatrequireall Introducelegislationformandatory natural resources. ensure Australiagetsa fairsharefromour gas projectsinCommonwealth watersto Introduce a10%royalty forallnewoffshore etc.); methodology usedtocalculatetaxableprofit, and transferableupliftrates,reviewingthe self-audit system,eliminatinggenerous scrutiny onPRRTreporting,endingthe Reform thePRRT(includingthroughincreased reduced disclosure; standards andnotbeallowedtoqualifyfor comply fullywithallAustralianaccounting private subsidiariesofmultinationals,to companies operatinginAustralia,particularly Enact legislationtorequirealllarge requested byforeigngovernments; provide technicalassistance,ifnecessaryor tax authorities,iftheyarenotalready,and Exxon’s taxaffairswithotherrelevantnational Require theATOtoexchangeinformationon on anyfindings; investigator toreportbacktheCommittee and MakeExxonPaybyappointingaspecial agencies, investigatesallclaimsmadebyTJN through theATOandotherdepartments 17

TJN-Make Exxon Pay Senate Submisison on ExxonMobil 09/02/2018

“ EXXON’S CONTINUED SOCIAL LICENSE TO OPERATE IN AUSTRALIA NEEDS TO BE QUESTIONED. THERE MUST BE REAL CONSEQUENCES FOR COMPANIES LIKE EXXON THAT CONTINUE TO PURSUE AGGRESSIVE TAX MINIMISATION OR AVOIDANCE STRATEGIES IN AUSTRALIA AND AROUND THE WORLD. ”

February 2018

For more information: Jason Ward M: +61 488 190 457 E: [email protected] www.taxjustice.org.au

TJN-Make Exxon Pay Senate Submisison on ExxonMobil 09/02/2018 data/34088/000003408817000017/xom10k2016.htm