The importance of honesty in tax debate

ExxonMobil Australia has signed up to the Australian Taxation Office’s voluntary Tax Transparency Code (TTC).

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The importance of honesty in tax debate

This code is intended to complement Australia’s existing tax transparency measures and is designed to encourage greater transparency within the corporate sector, particularly by multinationals, and to enhance the community’s understanding of the corporate sector’s compliance with Australia’s tax laws.

The Tax Act is one of the most – if not the most – complex pieces of regulation governing the way a company does business. As a result, it is not well understood in the general community.

In recent months we have seen increasing examples of people who are prepared to exploit this lack of understanding by attacking major companies, including ExxonMobil, in order to further their own agendas.

“The reality is any company that cheats on its tax does not stay in business for long,” said ExxonMobil Australia Chairman Richard Owen.

“Shades of dishonesty simply invite demoralising and reprehensible judgments that ultimately destroy reputations.

“The ExxonMobil Australia group has been operating successfully in this country since 1895. We have always considered our ethical reputation for scrupulous dealing is itself a priceless corporate asset.”

Richard said that the ATO’s TTC initiative provided an excellent avenue towards countering the destructive, misleading information on company taxation being increasingly peddled by unscrupulous advocates.

“ExxonMobil strongly supports transparency initiatives that improve governance and revenue accountability,” he said.

“Good governance is essential for creating an economic climate conducive to large-scale, longterm investments.

“We need these on-going investments to ensure the long-term viability of our business and our ability to generate the economic development of the communities where we operate.”

Photo — Earlier this year, ExxonMobil Australia completed the start-up of our $5.5 billion Kipper Tuna Turrum Project, the largest single investment ever into Australia’s domestic gas supply: “We are a substantial investor in the Australian economy and a major contributor to the wealth of the nation.”

“We are a substantial investor in the Australian economy and a major contributor to the wealth of the nation,” said Richard. “Taxation can have significant implications as we compete globally for investment capital. So it is important to ensure we get our taxation right.

“As parts of the Tax Act are open to a range of interpretations, the process often requires detailed consultations and negotiations with tax authorities.

“The outcome of tax interpretations can have significant impacts on our business and can sometimes determine the viability of major project proposals.”

Since the Petroleum Resource Rent Tax (PRRT) was introduced in 1990, ExxonMobil Australia has paid more than $12 billion in PRRT alone.

This is on average more than $450 million paid to the Federal Government each year for nearly a quarter of a century. When combined with company income tax this has equated to an effective tax rate of over 50 per cent on ExxonMobil Australia group of companies profits over the past decade.

The company currently has investments of more than $20 billion, most of which have been invested over the past five years. These include Victoria’s Kipper Tuna Turrum Project, the largest ever single investment in Australia’s domestic gas market, and the giant Gorgon Project off Western Australia.

While these multi-billion-dollar projects were under construction, the company was in a corporate income tax loss position. Now that they have been completed and are producing gas, the amount of tax paid by ExxonMobil Australia is anticipated to increase significantly.

According to analysis by ACIL Allen, ExxonMobil’s current investment in Gorgon alone will deliver about $15 billion in federal taxation out to 2040. For more information on the company’s tax, go to ExxonMobil Australia tax facts.

Photo — Richard Owen: “The ExxonMobil Australia group has been operating successfully in this country since 1895. We have always considered our ethical reputation for scrupulous dealing is itself a priceless corporate asset.”

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