The Tax Office is chasing oil major Shell Australia in Switzerland, asking the government for documents related to both its upstream and downstream companies, according to Swiss sources.
It is no secret the ATO is unhappy with the oil majors as they have radically ramped up their debts to their own offshore associates in order to siphon profits out of Australia. Over the past four years, total related party debts – that is loans by the oil giants to themselves – more than doubled from $52 billion to $107 billion. Meanwhile, third party debt rose from just $3 billion to $6 billion.
As a result, interest expense within Australia fell from $457 million to $170 million while interest expense overseas rose from $1.7 billion to $2.4 billion.
It is likely the ATO is pursuing all four global oil majors. Chevron has been top of its hit list but Exxon is also deemed to be a shocking offender.
The ATO has asked for assistance regarding Shell Australia Limited (the downstream business which used to own the petrol stations before they were sold to Dutch group Vitol), Shell Energy Holdings Australia Limited (SEHAL) and Shell Australia Pty Ltd.
SEHAL is the ‘taxpayer’ company for the whole Shell group in Australia. Its also the upstream company, or oil and gas exploration entity. Shell Australia held the downstream business which was reduced to Aviation and Lubricants, which are are also earmarked for sale or transfer to Viva Energy. Vitol, the Swiss company that owns Viva, also has a trading arm in Singapore.
According to oil industry sources, there are a number of areas of interest for the Tax Office when it comes to Shell.
“I suspect there could be an ongoing tax investigation into Shell’s activities in Australia, particularly the sale of the Downstream business to Viva under which Viva pays Shell a brand licence fee,” said a source.
“The Shell company which now owns the brand was set up in Switzerland. The ATO looked into the internal, brand ownership transfer deal. The Swiss purchase the trademark and licensed this back to SAL.
“Another (possible aspect of investigation may be) SEHAL’s sale of the Woodside shares. These used to be owned by SAL, but were transferred to SEHAL as part of the split of the upstream and downstream businesses.”