Oil giant Chevron has said it will pay its fair share of tax in Australia, after a report accused it of tax avoidance on its largest global project – the Gorgon LNG project.
The report, Chevron’s Tax Schemes: Piping profits out of Australia? was produced by the International Transport Workers’ Federation (ITF) and endorsed by the Tax Justice Network – Australia and has unveiled how much tax revenue may be lost through complex profit shifting schemes.
It said that at the same time as Chevron set aside A$352million to settle a lawsuit with the Australian Tax Office (ATO), it developed a new tax avoidance scheme. This high-interest related party loan, from a Delaware subsidiary, is worth more than AUD$35 billion.
This new tax scheme is currently being audited by the ATO.
Chevron and other oil companies in Australia are being called before a Senate Inquiry into Corporate Tax Avoidance.
The company responded stating: “Chevron abides by a stringent code of business ethics, under which we comply with all applicable laws and regulations in the countries in which we operate, including Australia.
“As one of Australia’s largest investors, Chevron will pay its fair share of tax and, through the Chevron-led Gorgon and Wheatstone Projects, Australia will continue to enjoy the associated economic benefits over the life of the projects.
The ITF claims the potential lost revenue from Chevron’s tax avoidance scheme is more than Australia’s annual budget for education and more than half the annual budget for health.
ITF President Paddy Crumlin has called on Governments around the world to take responsibility for closing down tax loopholes that can be used by multinationals.
He added: “For public confidence in the integrity of tax systems, they must be transparent and fair.
“The gas that will be extracted from Australia’s waters and sold overseas is owned by the Australian people and as a result should benefit those people through jobs and tax revenues,” Mr Crumlin said.
“If Chevron and other multinationals paid their fair share, governments would not have to cut funding for schools, hospitals and other essential public services.”
The report was released at the Global Labour Tax Summit held at the International Labour Organisation (ILO) in Geneva this week.
As inequality soars and governments claim insufficient revenue to fund jobs, healthcare and climate measures the growing corporate tax scandals are sparking public outrage, explained Rosa Pavanelli, General Secretary of Public Services International.
“Chevron is the latest study showing how multinationals avoid taxes and starve public services. The list now includes Apple, IKEA, McDonalds, Chevron, FIAT, Amazon and more” she said at the Summit.
Chevron’s Gorgon project in Western Australia is the world’s largest liquefied natural gas (LNG) project. It will be a major supplier of energy to the Asia-Pacific region for decades.
In addition to Chevron, Shell, Exxon Mobil and several Japanese energy companies are joint venture partners.
According to Chevron’s 2014 annual report, it has $35billion in untaxed profit stashed in off-shore accounts. Chevron is unable to estimate the tax it may be required to pay given the ongoing examinations by tax authorities in countries around the world.
The International Trade Union Confederation’s (ITUC) General Secretary Sharan Burrow has called for a global examination of Chevron’s tax schemes.
“If Chevron avoids so much tax in Australia, imagine what they might do elsewhere” Ms Burrow said.
The ITF said Chevron’s tax filings have not been approved by the United States government since 2008; in Nigeria since 2000; Angola since 2001; Saudi Arabia since 2012 and Kazakhstan since 2007.
Chevron said its worldwide income tax expense in 2014 was about $11.9 billion and in 2013 was about $14.3 billion and its worldwide effective rate for 2014 was 38.1% and in 2013 was 39.9%.
The US oil giant added its total worldwide income tax expense over the last four years (2011-2014), was over $66.8 billion. The worldwide average effective tax rate for the four-year period was 41.1%.