Chevron Australia Says Paid $2.26 Billion in Annual Income Tax

Chevron Australia Pty. Ltd. has reported a lower yearly income tax liability of over AUD 3.5 billion ($2.26 billion), compared to AUD 4.2 billion ($2.72 billion) for 2022, saying the remittance to the Australian government fell despite record natural gas production because lower prices dragged down revenue.

Taxable income totaled AUD 14.36 billion ($9.29 billion) for 2023, out of a gross income of AUD 24.15 billion ($15.62 billion). The Chevron Corp. subsidiary logged $5.98 billion in profit from continuing operations before income tax expense for 2023, compared to $11.54 billion for 2022, according to a “Tax Transparency Report” it published online.

Chevron Australia settled its 2023 income tax that year and 2024, it said. Meanwhile, its corporate tax cash payments for 2023 totaled more than AUD 5.9 billion ($3.82 billion), all paid last year. Besides income tax, the total included royalty, excise, interest withholding, payroll, fringe benefits and other withholding taxes.

Chevron Australia said it had an effective tax rate of 30.49 percent for 2023 based on Australia’s Tax Transparency Code, while accounting effective income tax rate landed at 24.78 percent. “The Tax Transparency Code requires companies to disclose an effective tax rate which excludes PRRT and other non-income-tax-related items that are required to be included in the accounting effective tax rate”, it explained. The Petroleum Resource Rent Tax (PRRT) applies to profits from the sale of petroleum commodities above a specified return rate. 

In comparison, Chevron had an effective income tax rate of 27.6 percent worldwide for 2023, according to the parent’s annual report.

Last year only the United States, Chevron’s home, and Australia accounted for at least 10 percent of the company’s net property, plant and equipment assets, according to the annual report on Chevron’s website.

“Chevron Australia is cementing its place as one of Australia’s top taxpayers”, Chevron Australia general manager for finance Steve Callaghan said in a statement.

The company said, “Now that our natural gas facilities are past the initial start-up phase and in full production, we expect we will continue to make profits and pay significant income tax for decades to come”.

Outside the U.S., Australia and Canada are the only countries for which Chevron publicly reports country-specific tax payments, according to a statement on Chevron’s website explaining its approach to tax disclosure.

Call for Transparency

Earlier this year a shareholder resolution to get Chevron to disclose country-by-country tax payments was voted down.

In the joint resolution, Oxfam America, Nordea Asset Management, the Benedictine Sisters warned the company of the risks of vulnerability to tax law enforcement and public distrust.

“Chevron does not disclose revenues or profits in each non-U.S. market where it operates, nor the corresponding foreign tax payments, challenging investors’ ability to evaluate the risks of taxation reforms, or to assess whether Chevron’s tax practices are consistent with long-term value creation”, stated the resolution, published on the U.S. Securities and Exchange Commission’s website.

The group wanted Chevron to follow suit after its oil and gas peers in aligning tax practices with the Global Reporting Initiative’s (GRI) standard. Released 2019, the multi-stakeholder standard provides guidelines for country-by-country public disclosure of business activities, profits and tax payments.

“At an asset level, risks may include: heightened attention of tax authorities and adjustment risk following tax authorities investigating whether a company’s tax planning complies with the law; vulnerability to changes in tax regulation and enforcement; reputational damage and loss of social license to operate”, stated the resolution.

“At a portfolio level, aggressive tax avoidance by one company may undermine fair competition between all companies in a sector”, the resolution added.

“Widespread tax avoidance may also have larger macro-economic impacts by reducing money available for government spending on critical services and infrastructure, which enable long-term business and social sustainability”.

“In the case of Chevron, tax authorities across the globe have repeatedly challenged the company's approach to taxation, producing significant expenses for the company, including increased tax liabilities and legal expenditures”, the resolution said. “According to the company’s own annual report, Chevron has paid out settlements with tax authorities every year since at least 2007, including a payment of $429 million in 2020 and $1.17 billion in 2017”.

The co-filers cited Chevron’s tax-related legal cases in Australia, Kazakhstan, the Netherlands, Nigeria and the Philippines.

In the statement on its approach to tax disclosure, Chevron says, “We currently provide annual confidential country-by-country reports to tax authorities, including the U.S. Internal Revenue Service”.

Chevron says in the report that it submits “project-level data of our payments to governments or their agents in EITI implementing countries where we have upstream operations”. It listed these countries as Angola, Argentina, Cameroon, Colombia, Iraq, Kazakhstan, Mexico, Nigeria, Republic of the Congo, Suriname, the United Kingdom and Myanmar; the EITI on February 29, 2024, delisted coup-hit Myanmar.

Oxfam’s similar resolutions for ConocoPhillips and Exxon Mobil Corp., all filed around the same time, were also defeated.

Despite failing to convince investors, Oxfam said in a statement May 31, “The 17 percent vote in favor of our resolution at ConocoPhillips and the preliminary vote counts of 14 percent at both Chevron and ExxonMobil signal growing shareholder support for tax transparency”.

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