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Not really, no

BP is on course to pay a lower tax rate this year than before the onset of Covid, despite a raid on energy companies’ profits during the cost of living crisis.

The FTSE 100 oil behemoth said it expects its global underlying effective tax rate this year to be around 35pc, which compares to 36pc in 2019 and 38pc in 2017 and 2018.

Murray Auchincloss, finance chief, told analysts last week the rate had been helped during the first half of the year by strong results from its refineries and traders.

He said he expected the company’s overall effective tax rate to be around 30pc during the first half of the year, rising to 40pc in the second half, averaging at 35pc for the full-year.

Mr Auchincloss added: “I suppose what we didn’t plan for at the beginning of the year was a much stronger refining market, nor did we plan for exceptional trading results. So, if you take account of those things, that’s what drives the effective rate lower.”

BP said it typically pays tax on products sold as they leave its refineries. These facilities are typically located in lower-tax countries than the wells where it extracts oil and gas from the ground.

The explanation isn’t right. It’s actually that oil wells pay ihgher tax – righteously – than refining. Look at the UK tax system. Refining pays normal corporation tax. Wells pay the special regime for oil wells at much higher rates.

6 thoughts on “Not really, no”

  1. I dont mean to be that guy but I read what you quoted the way you say it should be-

    “These facilities are typically located in lower-tax countries than the wells where it extracts oil and gas from the ground.”

    That to me reads as though the wells pay more tax.

  2. Refineries have to be near the customer so that the right mix of product is produced for that market. And yes, Lurker, royalties paid to government are higher than corporation tax. But it’s worded to suggest that the oil majors deliberately place the refineries to minimise tax revenue.

  3. OT, but still about unexpected tax rates. I just found out I can have air conditioning installed in my gaff without paying VAT for it. Something to do with Rishi Sunak and heat pumps. I’m suddenly feeling a bit warmer towards greens and their “subsidising” ways… 😀

  4. Talking of Tax, Lies and Control, Prof Spud gained a citation

    How the woke left learned to love Big Brother
    .
    The British Left’s silence on state censorship is shameful and revealing, says Tom Slater
    .
    ‘Who are the real snowflakes?’, thundered one left-wing commentator. ‘Fascism creeps ever closer’, warned Richard Murphy, a one-time adviser to Jeremy Corbyn
    .
    https://www.spiked-online.com/2022/08/06/how-the-woke-left-learned-to-love-big-brother/

    Spud will be furiousy banging his keyboard

  5. Can you financialize me now?

    Why ignore trading profits taxed at what, 15% (in the States at least)?

    《nor did we plan for exceptional trading results.》

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