Royal Dutch Shell PLC received a $32-million (U.S.) refund on its Canadian corporate income taxes last year despite generating hundreds of million of dollars from its operations here.
The Anglo-Dutch oil giant on Wednesday released a transparency document that reveals it paid $27-billion in taxes last year (not including sales tax), and breaks out the 14 countries in which it has major operations.
Shell earned $$28.6-billion last year after spending $31-billion on capital investment, but does not break out its Canadian earnings or investment spending.
Last year, the Netherlands-based company recovered $32-million in back taxes from Canadian governments because it had overpaid in recent years and because it has been investing heavily in its oil sands projects, a spokesman said. Shell also paid $320-million in royalties to provincial governments.
"Under Canadian income tax rules, income tax can be a volatile number depending on the earnings of a company in a given year relative to the amount of new investment," company spokesman David Williams said in an e-mail.
"The 2011 income tax number reflects the impact of major investments [that Royal Dutch Shell]has made in Canada over the last several years. These investments will generate higher future taxable income as projects reach productive capacity."
Since Shell purchased the minority shares in its Canadian subsidiary in 2007, the company has not broken out separate financial information for its operations here.
The release of tax information was part of its commitment under the international Extractive Industries Transparency Initiative to publish what the company pays governments.
Globally, Shell paid the largest amount of tax in Nigeria, where it was a pioneer in offshore development and has encountered massive resistance to its operations over concerns about the environment and corruption. The company paid a total of $6-billion in income tax and royalties to Nigerian governments.
It also paid more than $1-billion in taxes and royalties in Norway, Denmark, the United Kingdom, the United States and Malaysia.
Shell's 2011 income-tax holiday in Canada appears to be an aberration in the industry, which as a whole paid nearly $20-billion (Canadian) to three levels of government from the oil and gas producing side of the business alone, according to the Canadian Association of Petroleum Producers. That was up from about $15-billion in the recessionary year of 2009, but down from $30-billion in 2008, a boom year in which both oil and natural gas prices had soared.
Imperial Oil Ltd. reported that it paid $1-billion in income tax in Canada last year, while Suncor Energy Inc. , also of Calgary, paid $885-million.
The oil industry faces increasing scrutiny internationally as both the United States and the European Union are considering new regulations that would force resource companies to publish what they pay to governments in order to reduce corruption.
In the United States, the industry has been trying to derail a proposal at the Securities and Exchange Commission that would force companies to report payments on a project-by-project basis, regardless of whether the host country supports the disclosure.
Shell chief financial officer Simon Henry has told the SEC that the company supports the intent of the rule, but would rather see it imposed at the international level to ease compliance and not give competitive advantage to global rivals who are not bound by the rules.