Oil markets are taking a…
New regulations to boost accuracy…
New research from the International Workers Federation (IWF) is claiming that big oil players in the North Sea, including Chevron and China’s Nexen have avoided paying significant sums in taxes through a scheme involving a secretive corporate structure.
The structure, which includes hundreds of subsidiaries in tax havens, has allowed the companies to direct money to those same tax havens, substantially reducing their tax burdens, according to the report’s findings.
The IWF’s general secretary Steven Cotton said that the scheme originated with Chevron, but has been copied by a host of other oil and gas companies operating in the North Sea. Chevron alone, said Cotton, had as many as 200 subsidiaries in Bermuda alone.
The findings of the report can explain, at least in part, the major drop in oil tax revenues in the British budget. Another part of the explanation has to do with tax relief aimed at stimulating the industry in times of hardship. Says Cotton, “This at a time when there has been a dramatic reduction in tax revenue from the North Sea. In the mid 1980’s, taxes on North Sea oil production accounted for nearly 9% of all tax receipts collected by the UK Government - today it is just 0.7%.”
A special case in point is the plunge in Scotland’s oil tax revenues, which plummeted to just US$79 million (£60 million) in the 2015-2016 fiscal year from the massive US$2.37 billion (£1.8 billion) in 2014-15. The drop highlighted the effects of the global oil price slump but tax avoidance schemes may have also had something to do with this sharp fall in tax revenues.
Steve Cotton called on the British parliament to launch an investigation into the findings of the IWF study and the call was echoed by Unite, the largest trade union of oil workers in the North Sea. Its Scottish secretary Pat Rafferty said “The UK government needs to investigate and step up action to clamp down on any inappropriate tax loopholes being exploited by Chevron to make sure UK taxpayers aren’t taken for a ride and it pays its fair share.”
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.