(Demerara Wave) – Three United States (US) Democratic senators sent a letter on Tuesday to ExxonMobil CEO Darren Woods requesting information on the company’s accounting of its U.S. tax liability as a result of the 2016 Stabroek Block Petroleum Agreement, according to a statement.
The letter by senators Sheldon Whitehouse (Rhode Island), Chris Van Hollen (Maryland), and Jeff Merkley (Oregon) raises questions about whether American taxpayers are subsidizing ExxonMobil’s foreign oil production in Guyana, which the company carries out in partnership with a Chinese state-owned company.
Current U.S. tax rules offer a loophole for big multinational oil companies drilling in a foreign country to shrink their tax bills. Closing this loophole would save American taxpayers an estimated $71.5 billion over ten years.
“We are concerned about the possibility that American taxpayers may be subsidizing ExxonMobil’s foreign oil production, which they do in partnership with a Chinese state-owned company,” wrote Whitehouse, Van Hollen, and Merkley.
“Payments to a foreign government in exchange for an economic benefit [such as the right to extract oil and gas] are not considered taxes at all and thus cannot qualify for a U.S. foreign tax credit. However special rules allow ‘dual capacity’ taxpayers to divide up such payments into creditable taxes and non-creditable payments. While it is not difficult to distinguish between taxes and payments for economic benefits, current rules allow contracts to be structured in a way that blurs the distinction. This loophole is a particular boon to big multinational oil companies,” added the senators.
