Oil Change International

Exposing the true costs of fossil fuels

Follow The Money

Someone just forwarded a great newswire by Dow Jones that ran late last month, examining the issue of tax havens. For example did you know that the registered offices of the Shell Qatar multibillion-dollar gas-to-liquids venture is not in Qatar at all, but Bermuda?
This is not an isolated case. Oil companies are increasingly using countries such as Bermuda to incorporate their businesses in Africa, South America, the Middle East and Asia. Conveniently, the units incorporated in tax havens do not have to disclose their accounts, moreover Bermuda’s corporate tax is zero. It is no wonder that the oil majors have a huge number of companies registered there. The island is home to at least 67 Occidental companies; Exxon Mobil has fourteen. Chevron’s Angolan and Nigerian businesses; several of Total Iranian subsidiaries, as well as Shell’s subsidiaries in Saudi Arabia, Nigeria and Russia are all there too.

The reason they are there? Not only are the companies evading taxes but they can also use a variety of accounting tricks, such as “transfer pricing” so that profit from one country can pop up in a tax haven, thousands of miles away, before anyone has really understood how much profit was made. Another trick is the company based in a tax haven leasing equipment to a subsidiary in say Nigeria at exorbitant rates so the profit stays in the tax haven.

These tricks of the trade mean that oil companies reap vast profits whilst many host countries such as Nigeria, stay dirt poor. Clever eh?

Article cited:  Benoit Faucon, Tax Havens Ease Fiscal, Legal Risk On Global Oil Cos, Dow Jones, September 22, 2006.

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