Budget 2022: Multinationals including ExxonMobil and Chevron will be hit with $720m in extra taxes as part of government crackdown
Multinationals including Chevron and ExxonMobil will be hit with $720m in extra taxes as part of a crackdown by the Albanese government.
Multinational giants including ExxonMobil and Chevron will be hit with $720m in extra taxes as part of a budget crackdown on loopholes aimed at capturing a greater portion of windfall profits in the resources sector.
On Tuesday, Jim Chalmers told parliament that the measures were part of a $4.7bn suite of reforms aimed at cracking down on tax avoidance and helping with “budget repair”. “By making sure multinationals pay a fairer share of tax in Australia, by extending successful tax compliance programs, and by giving the Australian Taxation Office the resources they need to crack down on tax dodging. Together, these initiatives save a further $4.7bn over four years,” the Treasurer told parliament.
While the changes to the thin capitalisation rules apply to all offshore companies and investors – with the exception of financial services – they are largely aimed at international oil and gas giants that have reaped extraordinary profits from Australian operations while paying little tax.
While part of the reason for this is the enormous losses wracked up by their Australian arms while investing billions of dollars building new oil and gas projects, resources giants have also been accused of exploiting loopholes in the system by claiming deductions on loans taken from their parent companies – sometimes at inflated interest rates.
Soaring gas prices led to record profits for Australian energy giants such as Woodside Energy, with the LNG boom expected to boost profits of the Australian arms of international giants such as Chevron, Inpex and Exxon.
ExxonMobil in September said it had paid corporate tax for the first time in nearly a decade after a period of high oil and gas prices this year inflated the industry’s balance sheets and produced huge profits amid market chaos due to Russia’s war on Ukraine.
Several of Australia’s big energy companies including Exxon and Chevon have been touting their tax payments amid calls from unions and the Greens for a super-profit tax to reflect surging earnings for the local industry from sky-high LNG prices.
Exxon in May declared it would resume paying corporate tax for the first time in nearly a decade due to booming commodity prices. It now says it will pay $750m in corporate taxes for the year ending December 31.
But the tax take from resources giants will rise under the new changes to rules covering multinational companies and investors, which will limit debt-related tax deductions to 30 per cent of earnings before interest, tax, depreciation and amortisation.
Budget papers show deductions for related party debts will be disallowed under arm’s length rules, with the entire suite of reforms expected to bring in an additional $720m in tax revenue over the next four years.