Shell Highlights 4Q 2022 Tax Hit

Shell Highlights 4Q 2022 Tax Hit
Shell released a fourth quarter 2022 update note.

Shell has announced that the fourth quarter 2022 earnings impact of recently announced additional taxes in the EU and the deferred tax impact from the increased UK Energy Profits Levy is expected to be around $2 billion.

These impacts will be reported as identified items and therefore will not impact fourth quarter 2022 adjusted earnings and will have limited cash impact in the fourth quarter of 2022, given the expected timing of payments, Shell noted in a fourth quarter 2022 update note.

Shell said its update gave an overview of the company’s current expectations for the fourth quarter. Impacts presented may vary from the actual fourth quarter 2022 results and are subject to finalization of those results, which are scheduled to be published on February 2, 2023, Shell noted in the update.

On September 30, 2022, the European Council announced that EU energy ministers reached a political agreement on a proposal for a Council Regulation to address high energy prices. Member states agreed to set a mandatory temporary solidarity contribution on the profits of businesses active in the crude petroleum, natural gas, coal, and refinery sectors, the council stated at the time.

The solidarity contribution will be calculated on taxable profits, as determined under national tax rules in the fiscal year starting in 2022 and/or in 2023, which are above a 20 percent increase of the average yearly taxable profits since 2018, the council outlined back in September.

In November last year, the UK government announced a flurry of changes to the Energy Profits Levy, which was first introduced on May 26. This included a ten percentage point increase in the rate of the levy from January 1, 2023, a UK government fact sheet highlighted.

Rishi Sunak was appointed as the new Leader of the Conservative Party and the new UK Prime Minister in October 2022. The appointment followed news that Lis Truss was resigning as Leader of the Conservative Party and Prime Minister. 

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