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General tax

Is Australia getting its ‘fair share’ from multi-nationals like Chevron?

Chevron Australia pays a substantial amount of tax in Australia, including royalties, payroll tax, fringe benefits tax, excise and interest withholding tax. Since 2009, we have paid around $4.5 billion in state and federal taxes and royalties. After reaching full production, forecasts show these figures will increase to $2 billion - $3 billion a year by the early to mid-2020s.

Why is Chevron accused of not paying tax?

Chevron does pay tax. Chevron Australia pays a range of taxes and charges including royalties, payroll tax, fringe benefits tax, excise and interest withholding tax. Since 2009, we have paid around $4.5 billion in state and federal taxes and royalties. During this same period Chevron Australia was spending tens of billions of dollars constructing two major LNG and domestic gas projects – Gorgon and Wheatstone - and did not make a single dollar of profit.

The following graphic explains the taxes paid across the lifecycle of major projects.

Activist group GetUp recently accused Australian corporations of getting a ‘free pass’ on tax. What is your response?

Activist scare campaigns continue to mislead rather than contribute to a constructive debate on tax reform in Australia.  Comments by GetUp’s National Director on Chevron’s tax affairs are flat out wrong.  Since 2009, Chevron Australia has paid about $4.5 billion in federal and state taxes in Australia.

The nation’s tax rules apply to us in the same way they do any other business. The Chevron-led Gorgon and Wheatstone Projects are largely under construction and have not yet produced a dollar of profit. Once these projects are up and running, our tax contribution will increase. Independent analysis from ACIL Allen has forecast Chevron will pay $2 to $3 billion a year in company tax to 2040.

We need to encourage the next wave of investment in oil and gas – not impede the nation-building projects which deliver the thousands of jobs and billions in tax revenue.  The Australian public deserves better than activist scare campaigns that fail to contribute to a constructive policy debate.


Economic contribution

What is Chevron’s economic contribution to Australia?

Chevron’s projects and activities in Australia have delivered significant economic and social benefits. Once Gorgon and Wheatstone are in full production, they will have an even greater economic impact. An independent economic analysis by ACIL Allen shows between 2009 to 2040, Chevron projects and other activities will deliver:

  • more than A$1 trillion to Australia’s gross domestic
    product, nearly $32 billion per year;
  • almost 150,000 full time equivalent job years
    in Australia, nearly 5,000 jobs a year
  • more than $320 billion added to real incomes
    in Australia, around $10 billion per year; and
  • more than A$338 billion to Federal Government revenue.

Chevron Australia is proud of its achievements in developing the Gorgon and Wheatstone projects and the economic contribution these projects will make to the Australian economy over their operating lives.

At full capacity, Gorgon and Wheatstone have the capacity to produce 500TJ/d of domestic gas, around 50 per cent of WA’s current domgas supply.

What tax contribution does Chevron make?

Chevron Australia pays a range of taxes and charges including royalties, payroll tax, fringe benefits tax, excise and interest withholding tax.

Since 2009, Chevron Australia has paid around $4.5b in federal and state taxes, as shown in the below chart:

table

Why isn’t Chevron paying any income (company) tax?

While Chevron Australia did not pay income (company) tax in 2014/15, the company did pay a range of other taxes and royalties, totalling $574 million. The reason our 2014/15 taxable income was zero is because deductions for depreciation, our significant funding costs in Gorgon and Wheatstone, exploration costs, research and development costs and other operating costs were greater than our income which also declined along with global energy prices.

Does Chevron have any further detail about its tax and economic contributions?

To better inform the discussion around taxation reform and explain the substantial amount of tax Chevron pays in Australia, we have published a tax-transparency-fact-sheet on our website.

  • The document clearly outlines key facts and background on topics such as:
  • how taxes are paid across the lifecycle of major projects;
  • our current tax contribution; and 
  • our estimated future tax, Petroleum Resource Rent Tax (PRRT) and royalty contributions.

Petroleum Resource Rent Tax (PRRT)

How does the PRRT work?

The PRRT is a profit based tax. Once deductible costs are recovered, a tax rate of 40 per cent is applied.  This high tax rate reflects that it is a true profits based tax. PRRT is only one of a range of State and Commonwealth taxes and charges applied to oil and gas. Australia’s PRRT rules apply to Chevron in just the same way as they do any other resources business.

Chevron Australia expects to start paying Petroleum Recourses Rent Tax (PRRT) by 2029-2035 and pay $60-$140 billion over the life of our projects. 

Why aren’t we paying PRRT yet?

PRRT is a super-profits tax. It is deliberately designed to allow major projects to recoup their capital investments. After that time, PRRT is then payable at a rate of 40 per cent. This is on top of income tax – making for an effective tax rate of 58 per cent. Low prices and high construction costs have contributed to Chevron not being liable for PRRT yet. This is the way the tax is designed to work and the rules apply to all resources companies in the same way.

Based on a range of price and other assumptions, Chevron Australia expects to first pay PRRT somewhere between 2029 and the mid 2030s and expects to pay between $60b and $140b over the life of the projects.

This forecast is consistent with the findings of the Government’s Callaghan Review, which forecast a significant boost in PRRT revenues from the 2020s.

The review found also found “the PRRT remains the preferred way to achieve a fair return to the community for the extraction of petroleum resources without discouraging investment.


Federal Court litigation

What is the latest on Chevron's loan transfer pricing dispute with the ATO?

Chevron Australia has reached agreement with the Australian Taxation Office on the loan transfer pricing dispute and have withdrawn our appeal to the High Court. Chevron believes the agreed terms are a reasonable resolution of the matter and are not expected to have a material impact on the year to date results of the company.

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Members of the Media

Contact Chevron Australia Media Relations at:

+61 (8) 9485 5695

Tax Transparency
Fact Sheet

Tax Transparency Fact Sheet