Revenue transparency and tax

Tax binds governments, communities and businesses together. Public funds support healthcare, education, transport and other essential services. Revenue transparency provides citizens with important information to hold their government representatives accountable and to advance good governance. 

In 2018:

• we paid more than $64.1 billion in taxes and royalties to governments around the world;
• we paid $10.1 billion in income taxes. Our government royalties were $5.8 billion; and
• we collected $48.2 billion in excise duties, sales taxes and similar levies on our fuel and other products on behalf of governments.

Our approach

We comply with applicable tax laws wherever we operate. We are transparent about our tax payments to governments and strive for an open dialogue with them. This approach helps us to comply with both the letter and the spirit of the laws. For Shell, being transparent is also about showing how developing energy resources provides governments with an opportunity to generate revenues, support economic growth and enhance social development.

Principles

In line with the Shell General Business Principles, we support several external voluntary codes, including the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises and the Business and Industry Advisory Committee to the OECD Statement of Tax Principles for International Business. We endorse the responsible tax principles set out by The B Team, a non-profit initiative formed by a group of global business leaders, and we work towards full implementation of these principles.

EXTERNAL VOICE

The B Team seeks to catalyse a better way of doing business, for the well-being of people and the planet.

"Since 2012, Shell has been advancing its tax transparency, providing voluntary disclosures about its payments to government and economic contribution. Over time, this has enabled key stakeholders, in particular civil society, to better understand the approach it takes to responsible tax governance and management. Shell’s commitment to strengthening both its practices and leadership in tax transparency, which is reflected in the company’s commitment to The B Team Responsible Tax Principles, extends to supporting effective institutions. Shell has engaged in constructive multi-stakeholder dialogues to help grow responsible tax into a better understood and more widely practiced business norm."

Transparency

In 2012, we were one of the first energy companies to voluntarily publish revenues that our operations generate through income taxes, royalties and indirect taxes for governments around the world. As of 2016, we make mandatory disclosures under the UK’s Reports on Payments to Governments Regulations 2014, and we file our Payments to Governments Report with the UK’s Companies House. The report covering calendar year 2018 has been published at www.shell.com/payments.

Transparency is only effective if all parties in a country follow the same disclosure standards. Shell is a founder and board member of the Extractive Industries Transparency Initiative. Consistent with the initiative’s requirements, we continue to advocate mandatory country-by-country global reporting, as most tax payments are made at the corporate level to national governments. We support unified revenue reporting rules and standards applicable to all multinationals, irrespective of their ownership or place of business.

Shell is actively involved in revenue transparency discussions and we are working to develop an approach that takes into account the views of the relevant parties involved, including industry, governments and civil society.

Tax strategy

It is the right of governments to determine tax policies and tax rates and to draft tax laws accordingly. They do so under strong competition for capital and investment, which is internationally mobile. We use legitimate tax incentives and exemptions designed by governments to promote investment, employment and economic growth.

When considering the viability of investments, tax is one of the factors we examine. Income tax is just one part of the overall tax regime considered. We expect to pay tax on our income in the country where activities take place, and believe double taxation of the same activity by different jurisdictions should be avoided. Shell supports efficient, predictable and stable tax regimes that incentivise long-term investment. We expect the laws to be applied consistently, creating a level playing field for all.

Governance of tax

Royal Dutch Shell plc’s Board of Directors is responsible for maintaining a sound system of risk management and internal control, and for regularly reviewing its effectiveness. This system also covers taxation, which forms an integral part of the Shell Control Framework. Each year, the Board conducts a review of the effectiveness of Shell’s system of risk management and internal control, including financial, taxation, operational and compliance controls.

Collaborating with others

Shell supports cooperative compliance relationships with tax authorities on the basis of the framework proposed by the OECD Forum on Tax Administration. We have these relationships in the UK, the Netherlands, Singapore and Italy, and a pilot relationship in Austria. Shell is also part of the OECD pilot International Compliance Assurance Programme, which aims to facilitate open and cooperative engagements between multinational companies and tax administrations.

We provide the authorities with timely and comprehensive information on potential tax issues. In return, we receive treatment that is open, impartial, proportionate, responsive and grounded in an understanding of our commercial environment. This approach improves the transparency of our tax affairs and allows Shell to better manage its tax-related risks throughout the life cycle of each project.