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Dutch FT: Shell in conflict with Australian tax authorities

The British-Australian newspaper The Guardian discovered that Shell Energy Holdings Australia is trying to “get under” *(evade/dodge/escape/deflect?) the bill through the courts.

Printed below is an English translation of an article published today by the Dutch FT, Financieele Dagblad

Shell in conflict with Australian tax authorities

Maarten van Dun: 27 August 2019

Pedestrians walk past a Shell station in Melbourne. Photo: Carla Gottgens / Bloomberg

Shell has appealed against a decision by the Australian tax authorities. The ATO believes that Shell should pay back a tax benefit of A $ 755 million, converted to € 460 million. The Anglo-Dutch oil company wants to get rid of this tax assessment through the courts.

Shell received the tax assessment from the Australian Taxation Office (ATO) for its share in Australia’s largest gas field, the Browse project. That field is off the coast of Western Australia and has an estimated value of A $ 30 bln. Shell has a 27% share in the gas field, which has been developing for fifteen years. However, production has never started due to the low global gas prices. Since 2016, the work has stopped completely.

Legislation

The Australian tax authorities believe that Shell is wrongly attempting to increase A $ 2.2 billion in tax deduction on its share in the gas field. It points to legislation that states that tax deductions are only possible for oil and gas projects that are actually in operation. The benefit does not apply during the development phase.

The British-Australian newspaper The Guardian discovered that Shell Energy Holdings Australia is trying to get under *(evade/dodge/escape/deflect?) the bill through the courts. Shell claims to be entitled to exemption, as can be deduced from the appeal submitted. It is of the opinion that it is indeed entitled to the deduction because the project was actually in use when it was “kept in reserve”, ready to be put into operation at any time.

Letter and mind

A Shell spokesperson reports that there is “consultation about the correct outcome” of the tax assessment. “Shell abides by all legal and tax obligations of the countries in which it operates and wants to pay the correct tax, according to the letter and the spirit of the law.”

The major attack for the oil company is in line with the Australian Taxation Office’s strategy, which does everything in its power to prevent multinationals from avoiding taxation on oil and gas projects.

The ATO is annoyed by the high interest that Australian departments of multinationals say to pay on loans from the head office. According to the tax authorities, this is an artificial situation, as a result of which Australian society may miss out on A $ 10 billion in tax revenues in ten years.

The tax authorities are successful with the approach of oil and gas multinationals. Last year the American company Chevron decided on a settlement of A $ 866 million, after the ATO had taken such a loan under the microscope.

SOURCE

*unsure on the correct translation so have offered some appropriateoptions

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