North Sea Oil Tax Avoidance Schemes Exposed

North Sea

By The Maritime Executive 08-24-2016 09:31:36

A new report released by the International Workers Federation (ITF) claims to have “lifted the lid on the secretive corporate structures and aggressive tax minimization schemes used by Chevron and other major North Sea oil producers, including Nexen, the Chinese Government controlled oil producer.”

Steve Cotton, ITF General Secretary, said the report Offshore Oil, Offshore Tax laid out in detail the secretive corporate structures used by Chevron and now copied by other oil companies.

“The concerns emerging this week about the secretive corporate structure of Nexen are rife within the oil and gas sector. The public would be shocked to see how Chevron uses a complex web of companies to route money through the Netherlands, Bermuda and other tax havens. It has over 200 active subsidiaries in Bermuda alone,” 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 nine percent of all tax receipts collected by the U.K. Government - today it is just 0.7 percent.

“While production has fallen, tax revenues have fallen much further, due to tax cuts and aggressive tax minimization schemes.

“To put this revenue slump in context British motorists paid six times more tax on petrol ($26.9 billion in 13/14), excluding VAT, than the oil and gas industry paid on all taxes covering North Sea oil production ($4.4 billion in 13/14).

“It is well documented that both Shell and BP are using similar corporate structures to reduce their tax in the U.K. Both BP and Shell in 2014 paid no UK corporate tax.

“I think the public will demand action from our political leaders to get to the bottom of what this report has found. The U.K. Parliament needs to establish an inquiry to investigate the corporate structures used by the oil companies operating in the North Sea and the impact they have on security, taxes and royalties,” Cotton said.

Unite, the largest union in the North Sea oil fields, Scottish Secretary Pat Rafferty said: “The U.K. government needs to investigate and step up action to clamp down on any inappropriate tax loopholes being exploited by Chevron to make sure U.K. taxpayers aren’t taken for a ride and it pays its fair share,” he said.

Shadow Chancellor, John McDonnell MP who has been briefed on the report said: "This thorough new research blows open the complex tax avoidance measures undertaken by a major multinational. Anyone concerned with ending the scourge of tax avoidance needs to pay careful attention to its findings. It's time to put a stop to these complex company structures that rip off taxpayers and place extra strains on public services across the globe."

The report is available here.

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.