Despite achieving record global profits of about $30 billion (£26 billion) so far this year, Shell has paid zero windfall tax in the UK, sparking demands for the government to revisit a scheme that was meant to raise billions to address the cost of living problem.
The oil business with headquarters in the UK said that it had not paid the tax and did not anticipate doing so during 2022 since its British corporate entity did not turn a profit during the quarter, in part due to significant investment on further oil drilling in the North Sea.
When Rishi Sunak was chancellor, he proposed the energy earnings levy in May to assist pay for support for British households affected by the cost of living problem. Rishi Sunak assumed the post of prime minister off UK on Tuesday.
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The government had anticipated receiving £5 billion from the energy earnings levy, but some economists have cautioned that the actual amount may be substantially lower due to extensive use of tax breaks.
While the Trades Union Congress called for a reconsideration and stated that the UK required a “real windfall tax,” Labour referred to Shell’s earnings as “obscene.”
After facing significant political pressure, Sunak unveiled the plan, acknowledging that the industry was “making extraordinary profits, not as a result of recent changes to risk-taking, innovation, or efficiency, but as a result of surging global commodity prices driven in part by Russia’s war” in Ukraine.
However, Sunak’s plan also provided increased tax incentives for spending money on oilfield exploitation in the North Sea. Businesses may save 91p on taxes for every £1 invested in the North Sea. Additionally, it excludes earnings from the company’s forecourts, refineries, and trading of oil and gas cargoes.
Sinead Gorman, the financial director of Shell, said that the business did not anticipate paying anything this year in accordance with the energy profits levy.
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“Heavy capex [capital expenditure] has meant that we haven’t had extra tax coming through in this quarter yet,” she said. “I do expect to see that extra tax … to happen quite early in the first quarter of 2023, but we’ll see what plays out with prices as well.”
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