The tax rates on the oil companies are mostly due to foreign governments that tax the hell out of them. The effective rate for U.S. taxes on oil companies is astoundingly low. Like single digits or close to it last time I checked. Due mostly to foreign tax credits the U.S. allows.
What I said is bullshite?
Nope. It is not. It is accurate. Other poster is FOS or clueless if he disagrees.
XYZ Corp earns some taxable amount overseas
XYZ pays 25% tax in that country (call it FR for Foreign Rate)
A) Does XYZ pay US Rate - FR to US Treasury?
B) Does XYZ need to keep that money in that country or is any repatriated funds treated the same?
quote:This is the key point. Exxon is paying at least 35% tax on all of its income. The amount of income subject to 35% U.S. tax is only a fraction of Exxon's world-wide income. $1,547,000,000/35% = $4,420,000,000 is effectively the amount of income on which U.S. taxes are collected, or about 1/18th of world-wide income.
They are not "getting out" of the 35% tax rate in the U.S.
Foreign govs arse rape the oil companies to extract oil on their lands.
Uh what? Which countries are you talking about? We own and operate fields in Egypt and Indonesia and the tax structure is quite favorable to us. "Foreign govs" is quite a blanket statement wouldn't you agree?
To be fair to what you initially stated, however, certain countries do in fact have high tax rates for US companies (as well as "foreign" co.'s) if they are not a net importer.
CARACAS, Venezuela —
Venezuela is imposing a windfall profits tax on royalties from oil projects when crude prices are above $40 a barrel, seeking to squeeze as much as $16 billion mostly out of foreign oil companies, the government said Tuesday.
Energy Minister Rafael Ramirez said the tax, which was decreed by President Hugo Chavez last week, will allow the government to collect between $9 billion and $16.3 billion this year.
A 20 percent tax will be in effect when the price of a barrel of Venezuelan oil is between $40 and $70 a barrel, Ramirez said. When the price is between $70 and $90, the tax rises to 80 percent. Between $90 and $100, the tax reaches 90 percent, and if the price tops $100 a barrel, a 95 percent tax will be imposed.
The price of Venezuela's heavy, sulfur-laden crude reached $94.60 a barrel Tuesday, Ramirez said.
PDVSA is awaiting a ruling from the World Bank's International Center for Settlement of Investment Disputes in a dispute with Exxon Mobil Corp. The case was brought by the Irving, Texas-based company in 2007 over the government's nationalization of the Cerro Negro heavy oil project.
Exxon Mobil has also sought to recoup increased royalties and taxes imposed by the government starting in 2004. Exxon Mobil's oil project was one of four taken over by Chavez's government in May 2007 as he brought the oil industry under majority state control.
Caracas, Venezuela, May 9, 2006—On his weekly television show Alo Presidente, on Sunday, VenezuelanPresident Hugo Chavez announced a new "extraction" tax of at least33% for all oil companies operating in Venezuela. Chavez said the taxcould create over $1 billion in new revenue.
According to the Venezuelan daily El Universal, the Ministry of Energy andPetroleum will introduce a reform to the hydrocarbons law to the NationalAssembly today. The change will ensurethat at least one-third the value of every barrel stays in the hands of theVenezuelan state. As such, the tax is nearly identical to a royalty.
For some companies, the changewill be minimal. El Universal reportedthat for PDVSA’s own production, they will continue to charge the royalty of30%, plus the extraction tax, will make the total tax 33%. For now, the newly formed joint ventureoperations with Venezuela’sPDVSA will be exempt from the new tax, as they are already paying 33% in royalties. While, the associations in the Orinoco belt will have to pay 16% in the new tax, on topof the 17% royalty they currently pay, to equal 33%. It was reported that the additional revenuefrom this extraction tax could equal $1.34 billion in its first year alone- ifpetroleum prices remain at their present value.
Other tax hikes are in theplanning stages for natural gas companies and for the oil companies operatingalong the Orinoco River, which is believedto have extra-heavy crude reserves of up to 235 billion barrels. Among the companies that operate along the Orinoco belt are the North American ExxonMobil andChevron, which currently pay 34% in income taxes. Chavez announced that they are going toincrease that “to 50%, but in order to do so we need to modify the HydrocarbonLaw.”
Venezuela is the fifth largest oil exporting country in the world with the largest reserves of heavy crude oil at an estimated 99.4 billion barrels (1.580×1010 m3) as of 2010. Venezuela is the second largest reserves of light and heavy crude oil in the western hemisphere.