UK Taxpayers Hand Over $123 Million to Oil Giant Shell… in Tax
UK Taxpayers Hand Over $123 Million to Oil Giant Shell… in Tax © AFP 2016/ Adrian Dennis
19:07 22.04.2016Get short URL
Of the 24 countries mentioned in Shell’s ‘Reports on Payments to Governments’ – published under new UK regulations affecting the oil extraction industry – the United Kingdom featured as the only net contributor to the oil giant.
What that means in layman’s terms, is that where Shell’s 2015 taxes were concerned, the UK not only didn’t receive any money, it actually ended up paying out money.
According to the report, Shell paid out a total of US$22 billion in royalties, fees and taxes across 24 countries last year — the largest recipients being Nigeria, Malaysia and Norway. The UK on the other hand, was the only country to make a net loss on the company’s tax receipts.
British taxpayers handed over US$123 million as a result of changes to the tax system which entitled Shell to a rebate linked to the Brent oilfield, located in the East Shetland Basin of the North Sea.
The Brent oilfield was previously one of the most productive of the UK’s offshore assets, but production levels are no longer considered economically viable. As such, the oilfield is to be decommissioned over the next decade. Nevertheless, Brent is estimated to have contributed well over US$28 billion in corporate taxes to the UK’s exchequer.
The money paid by the UK, reflects costs claimed by Shell for decommissioning, against tax paid in previous years. The oil company was also reported as not having paid any corporation tax in 2014 either, despite posting a global profit of US$28.5 billion.
The UK Chancellor George Osborne has cut taxes related to North Sea oil production in reaction to a continuing drop in oil prices which has seen the loss of around 65,000 jobs over the last two years. In the Chancellor’s 2016 Budget, he reduced the Petroleum Revenue Tax (PRT) from 35% to 0% — effectively abolishing it — a decision which is expected to cost around US$1.4 Billion over the next four years.
According to the Office for Budget Responsibility, tax revenue in the North Sea is expected to remain negative for at least the next five years, which is likely to cost the UK Government around US$7.6 Billion in the process.