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Iron Ore Prices Rise as China Ramps Up Imports

Iron Ore Prices Rise as China Ramps Up Imports

Despite challenges like the Evergrande…

Australian Senate Grills Exxon On Tax Avoidance

An Australian Senate commission looking into tax avoidance practices among large international companies operating in the country questioned Exxon about not paying any taxes since 2013, despite turning in a profit every year since then.

The company said it was investing heavily in new projects in Australia, adding it will restart tax payments in three years. “The only reason we’re not paying tax at the moment is because we just invested US$16.5 billion (A$21 billion),” the regional chairman of Exxon, Richard Owen, told the commission.

The tax avoidance investigation was spurred by a Federal Court ruling that another supermajor, Chevron, had shifted profits from Australia to the United States using an intra-company loan mechanism. The company had appealed a decision by the Australian Tax Office at the Federal Court. Later, Chevron settled with the authority, agreeing to cough up an undisclosed sum.

At the time, many saw the court ruling and the settlement as harbingers of more suits, and the tax agency did not disappoint. It is currently probing Rio Tinto, BHP Billiton, and other oil companies for tax evasion schemes.

Related: OPEC Deal In Jeopardy As Iran And Saudi Arabia Square Off

Exxon said it will be paying around US$470 million annually in taxes in Australia from 2021 onwards, with the company’s tax manager adding the giant Gorgon LNG project offshore Australia will only begin paying petroleum resource rent tax in the mid-2030s. For the period 2007 to 2017, according to Reuters, ExxonMobil Australia has had an effective tax rate of more than 50 cents for every dollar, including income tax and the petroleum resource rent tax.

The supermajor caught the authorities’ attention with an internal loan that they apparently saw as similar to the loan that pushed Chevron to settle after violating the arm’s length rule for internal loans, which seeks to prevent tax evasion. Exxon said its loan was very different from Chevron’s, with the interest rates at 3-5 percent.

By Irina Slav for Oilprice.com

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